February 13, 2023
Get There First or Get Shot Down First: Financial Policy and the Venture Capitalist’s Appetite for Risk, 1974-1990
M.R. Sauter, Assistant Professor, University of Maryland
Chair: Manuel A. Bautista-González, University of Oxford
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M.R. Sauter is an Assistant Professor at the University of Maryland College of Information Studies. They are the author of The Coming Swarm: DDoS Actions, Hacktivism, and Civil Disobedience on the Internet. Their current research focuses on the history of finance in high technology, the “innovation economy,” and the ways in which corporate policies impact the security and rights of individuals. They received their PhD from McGill University in 2020, and they hold a master’s degree in Comparative Media Studies from MIT. They have held research fellowships at the Berkman-Klein Center for Internet and Society and New America. Their work has been published in The Atlantic, the Journal of Communication, the Case Western Reserve Law Review, Real Life Mag, e-flux, New Media and Society, Ethnography Matters, HiLow Brow, io9, Vice, the National Post, the Globe and Mail, the Los Angeles Times, the American Behavioral Scientist, and the MIT Technology Review, and in collected volumes published by MIT Press and Peter Lang. They have frequently appeared as an expert on technology, culture, and politics on the CBC, NPR, TVO, the BBC, PRI, American Public Media, the Boston Globe, and other international outlets. Their research has been featured by Popular Mechanics, BoingBoing, Slate, Der Spiegel, and the Christian Science Monitor.
This book chapter examines a set of policy changes in the 1970s that fundamentally altered the way “risk” was considered with regard to venture capitalists, venture capital investment, and the types of assets that were permitted to be used in venture investments. Policy changes to the Employee Retirement Income Security Act of 1974 (ERISA)’s prudence standard in 1979 are known to have substantially altered the financial understanding of “risk” as it pertains to pension funds. Other contemporary changes to the U.S. Securities and Exchange Commission (SEC) rules regarding the acquisition and resale of unregistered securities further contributed to the embedding of certain understandings of risk within the developing venture capital community at this time. A concerted public relations campaign, mounted by members of the Small Business Administration blue ribbon task force beginning in 1976, promoted a public image of the venture capitalist as a quintessential “risk-laborer,” with special skills regarding financial and technological risk, a special relationship with the future, and a recognizable role in the American imperial project. This book chapter unpacks that effort, connecting the narratives deployed in support of this version of venture capital to the policy agenda put forth by the SBA blue ribbon task force, which included the ERISA prudence shift and SEC rule changes. This book chapter argues that the combination of this policy agenda and the public figuration of the venture capitalist created the conditions of possibility for the venture capital landscape we have today.”
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