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All the new investment activity has made it much easier for clever entrepreneurs to raise money. Several months ago, two West Coast venture capital companies were ready to put up $3.5 million in exchange for a 60% stake in a new firm specializing in X-ray photo lithography, which is used in semiconductor manufacturing. Then a third company heard rumors of the impending deal, made a hurried study and offered the firm $7.5 million for only a 50% interest. It was eagerly accepted. Amgen, a genetic-engineering company founded by a molecular biology professor from U.C.L.A. and a vice president from Abbott Laboratories near Chicago, raised an astonishing $19 million earlier this year. That was the third largest amount ever given to a venture firm. Although the initial risk and rewards of venture capital belong mostly to the small select club of moneymen, the eventual winner will be the entire U.S. economy. The innovative companies that venture capitalists find and then foster will manufacture new products, provide jobs and increase productivity in the industries of the 21st century. Today's startups, which have names like Hybritech, Thermo Electron and Collasen, may some day join Eastern Air Lines, McDonnell Douglas and Apple Computer as the success stories of venture capital. —ByAlexander L. Taylor III.
Reported by MichaelMoritz/San Francisco and Frederick Ungeheuer/New York