The average investment per company that the venture capitalist community has made, has gone from seven million during the early 1980's to twelve million in the early 1990's. Keeping pace with inflation, it should be noted that the starter company, which includes everything, costs about ten million dollars. The technical aspects, typically, are about one-fifth of that or two million dollars.
Much more telling is the fact that the young startup venture companies spend as much on research and development per employee than does the Fortune 500 companies. This ratio is only a factor of two with $16,000 opposed to $8,000 per employee. The startup companies have a twenty-five percent job growth criteria in contrast to the Fortune 500 that have approximately zero growth criteria. Does this mean that increasing per spending on employee R&D will create more jobs? Not necessarily so. There are, as we shall see, eight or more criteria that contribute to the creation of wealth through the utilization of technology. Our object, as venture capitalists, is to make sure that at least half of our revenue will come from projects and products that were nonexistent years ago.
© R. Morley Inc. All Rights Reserved