Investments historically took form inside of large corporations or looked to wealthy families. The stock market crash of 1929, the ensuing Great Depression, and World War II resulted in an environment that was decidedly not entrepreneur-friendly; however, and, though it is a sweeping generalization, start-ups were few and far between during these periods
After the end of World War II, with former soldiers graduating college under the GI Bill, a newly educated generation of potential entrepreneurs began to emerge just as the U.S. economy was beginning a prolonged post-war boom. This, in part, laid the foundation for a renaissance for entrepreneurs.
The present day VC industry traces back to the creation of the VC/PE firm American Research and Development Corporation (1946) by Georges Doriot. ARD raised $3.5 million, of which $1.8 million came from nine institutional investors, including MIT, Penn, and the Rice Institute. The industry picked up real steam in 1958, when “Venture Capital was in its infancy,” according to Mark Heesen, president of the National Venture Capital Association, “[a] significant boost was given to the industry with the passage of the Small Business Investment Act.” The passage of the Small Business Investment Act gave tax breaks to private investment companies, leading to the creation of professionally-managed VC firms by licensing private, small business investment companies (SBICs) to help entrepreneurs finance and manage their startups.