Fostering Venture Capital The current scale of US venture capital is a relatively recent phenomenon, although the practice of private investing is not. In the early twentieth century, US venture capital was funded largely by foundations established to invest the holdings of wealthy families. Over time, the venture capital community expanded to include a variety of other organizations, but only in the past 25 years have conditions become favorable for pension funds to subscribe to venture capital funds. The Prudent Man amendment to the Employee Retirement Income Security Act (ERISA) in 1978, followed by a substantial decrease in US capital gains taxes, paved the way for a tremendous influx in the amount of money available for venture capital investment. The combination of these available funds, a healthy stock market, and burgeoning technological and entrepreneurial activity in areas such as Silicon Valley, New York, Boston, Southern California, and Austin, created the current US venture capital boom.