William Janeway’s book, Doing Capitalism in the Innovation Economy, is the Bible when it comes to understanding the digital economy and how it is financed. Of particular interest is an idea about the risks investors are willing to take. Venture capital exists in the digital economy not because it is riskier, but because it is in fact less risky than other parts of the economy when it comes to research and development. Venture capitalists are willing to finance radically innovative companies not because they’ve suddenly embraced the idea of risking everything, but because some traditional risks were eliminated forever by various public and private investments, notably in the technological platform that is the Internet.

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