The poor need the rich to start a company as banks are prevented (by the rich) from lending to them.
The rich like VC as it's a tax write-off, they invest in VCs and get even more richer.
Most startups fail, the VC's investors get any leftovers and poor founder walks off empty.
>What about when things go wrong?
In general, if you lose money on an investment, you can offset that “capital loss” against a capital gain you have from something else.
no. the banks hold the poor's money, and it needs to do so without risk because the poor need their money. lending money to start companies that are completly unsecured is too risky for banks, they lend money to buy houses which is secured debt.
Banks often lend at low LTV ratios because the prices are inflated so people on normal salaries can't actually afford to put down a large deposit, which means a slight drop puts them into negative equity but the banks are not concerned as they are protected.
If the state chose to underwrite startups in the same way...
Really ?
It turns out that commercialization is most of the work of creating a globally decentralized system. Which doesn't mean the non-commercial work wasn't critical.
What organizations do you think created the switches, routers, servers, software, fiber optic backbones? Who created the new protocols?
It was companies like AT&T/Bell Labs, Cisco, 3Com, Sun, UUNET, Netscape, AOL, the major telecoms, and a thousand other companies we don't remember.
Something like 1% inspiration from academia and government, and 99% perspiration by people working inside companies.
3Com, raised $1.1M from three venture capitalists in 1981.
Sun, a Kleiner Perkins portfolio company.
UUNET, raised from Accel, Menlo, and NEA in 1993.
Netscape, backed by Kleiner Perkins.
AOL, backed by Kleiner Perkins.