<P> Venture capital is also a way in which the private and public sectors can construct an institution that systematically creates business networks for the new firms and industries, so that they can progress and develop . This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring, marketing "know - how", and business models . Once integrated into the business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain . However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general . </P> <P> A venture may be defined as a project prospective converted into a process with an adequate assumed risk and investment . With few exceptions, private equity in the first half of the 20th century was the domain of wealthy individuals and families . The Wallenbergs, Vanderbilts, Whitneys, Rockefellers, and Warburgs were notable investors in private companies in the first half of the century . In 1938, Laurance S. Rockefeller helped finance the creation of both Eastern Air Lines and Douglas Aircraft, and the Rockefeller family had vast holdings in a variety of companies . Eric M. Warburg founded E.M. Warburg & Co. in 1938, which would ultimately become Warburg Pincus, with investments in both leveraged buyouts and venture capital . The Wallenberg family started Investor AB in 1916 in Sweden and were early investors in several Swedish companies such as ABB, Atlas Copco, Ericsson, etc. in the first half of the 20th century . </P> <P> Before World War II (1939--1945), money orders (originally known as "development capital") remained primarily the domain of wealthy individuals and families . Only after 1945 did "true" private equity investments begin to emerge, notably with the founding of the first two venture capital firms in 1946: American Research and Development Corporation (ARDC) and J.H. Whitney & Company . </P> <P> Georges Doriot, the "father of venture capitalism" (and former assistant dean of Harvard Business School), founded the graduate business school INSEAD in 1957 . Along with Ralph Flanders and Karl Compton (former president of MIT), Doriot founded ARDC in 1946 to encourage private - sector investment in businesses run by soldiers returning from World War II . ARDC became the first institutional private - equity investment firm to raise capital from sources other than wealthy families, although it had several notable investment successes as well . ARDC is credited with the first trick when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over $355 million after the company's initial public offering in 1968 (representing a return of over 1200 times on its investment and an annualized rate of return of 101%). </P>

When did the modern venture capital industry in the usa most likely begin