Is venture capital dead?

Venture capital (VC) is what used to drive the U.S. into the lead in the global economy. That ended around 2000 and it's been downhill ever since. Why? First, the dot-com boom let too many fake companies go public among the many real ones. Second, we had a lost decade when it comes to business-focused technological innovation. Now many question whether VC has a future. That's really the wrong question though -- they should be seeking the source of the next wave of business-transforming-technology.

Before exploring just how much woe faces VCs -- and by extension America's place in the global economy -- let's take a look at how VC became so important. It really got started back in 1957 with American Research and Development (ARD), which invested $70,000 in exchange for 70 percent of the now-defunct, Digital Equipment Corp. (DEC). Founded by MIT grad, Ken Olson, DEC took the lead in minicomputers and was a dominant IT company through much of the 1970s and early 1980s. In 1972 ARD sold its stake for a 70,000 percent return.