The End of the Beginning of Venture Capital

In the 1950s, the US government created the Small Business Administration to fill a gap in equity and debt financing available to small businesses. By 2004, the program designed to provide equity financing suffered from poor performance and irrelevance. A team of consultants engaged by the SBA will analyze the economic rationales that prompted the creation of the program and recommend appropriate action to maintain, terminate, or alter the program to match contemporary circumstances. 

The case illustrates the effects of government intervention in equity and debt markets over several decades with varying economic conditions. Arguments for and against the creation of the programs are given, along with historical developments that affect the program. The case also provides a narrative history of venture capital in the United States. The modern venture capital investing process is compared to the government equity finance program.