Since the early days of the U.S., venture capitalists have funded key technologies. Since the early days of the U.S., venture capitalists have funded key technologies. By Kenneth G. Pringle

If Samuel Slater was the father of the American Industrial Revolution, as President Andrew Jackson declared, then Moses Brown was the nation's first venture capitalist.

It was Brown, a Rhode Island blue blood whose name now adorns an Ivy League university, who in 1790 financed Slater's stolen ideas for a state-of-the-art cotton mill.

Together, they created America's first successful factory, Slater's Mill, breaking Britain's virtual monopoly on the Industrial Revolution and starting the U.S. on its way to global economic supremacy.

They also both made a fortune, and that's the point.

Modern capitalism sprouted where ideas met money. Brown is one in a long line of entrepreneurs who saw the high-growth potential of innovations like the steam engine, manned flight, computers, and artificial intelligence -- and took a financial leap to make it happen.

The first venture capitalists were wealthy individuals like Brown and Englishman Matthew Boulton -- who subsidized James Watt's steam engine in Great Britain -- and scions of wealthy dynasties like the Rockefellers in the U.S.

Venture capital entered the modern age after World War II, with the founding of firms dedicated to using investor money in search of "home runs" in emerging industries. VC built Silicon Valley, helped inflate the dot-com bubble of the '90s, and is behind many of today's artificial-intelligence bets.

Venture capitalists, back when they were still something of an exotic beast, were described by The Wall Street Journal in a May 3, 1963, column headlined "The Risk-Takers."

"Safe investments, you see, are really not in their line," the Journal wrote. "[T]hese risk-taking men always take a long look before they leap...they're much more able than many Americans to absorb the impact of an occasional mistake...likely to be [in an] electronic or some science-oriented area connected with space or rocketry."

That depiction still fits pretty well today, as it did in 1790.

Samuel Slater, born in 1768 into a farming family in Derbyshire, England, was apprenticed at age 14 to the owner of a cotton mill that was using the novel Arkwright water frame.

Water-wheel powered, the Arkwright produced high-quality cotton thread at unprecedented speed. It was a key component of the British Industrial Revolution, and its workings were a state secret. Disclosure was punishable by death.

Slater, however, was a risk-taker, and aspired to be more than a factory hand.

He put to memory the workings of the Arkwright apparatus and, after his apprenticeship ended, set off for America. Slater told no one of his plan, and traveled in the guise of a farmer. He risked death to make his fortune.

Moses Brown was born in 1738 into a leading family in the British colony of Rhode Island and Providence Plantations. The Browns had a hand in everything from ironmaking and rum distilling to whaling and the slave trade.

Moses Brown had already sunk a fortune into a failed cotton mill when he was introduced to Slater, a brash young Englishman with big promises and a knack for self-promotion.

"If I do not make as good yarn as they do in England," Slater told Brown, "I will have nothing for my services but will throw the whole of what I have attempted over the bridge."

Brown partnered with Slater, who was as good as his word, improving on the Arkwright model and turning out yarn that his old master in Derbyshire -- to whom Slater sent a sample -- labeled excellent.

Slater's Mill became both a moneymaking success and an example for other American industrialists.

And though Slater earned the sobriquet "Slater the Traitor" back home, he never returned to Britain to face the consequences. Instead, for his theft, he was feted as a hero in the U.S.

Alexander Hamilton lauded the "patriotic motives" behind Slater's Mill in his " Report on the Subject of Manufactures" on Dec. 5, 1791. And President Jackson visited Slater 30 years later, personally acknowledging him as "father of the American manufactures."

Jackson also paid his respects to the 94-year-old Brown.

In 1870, the year the U.S. overtook Britain as the world's largest economy, John D. Rockefeller incorporated Standard Oil. He would build the onetime start-up into an all-powerful monopoly by ruthlessly buying -- or destroying -- the competition.

His grandson, Laurance Rockefeller, took a different approach. Convinced of a bright future for commercial air travel after World War II, the younger Rockefeller provided seed funding for Eastern Airlines. He later backed hundreds of start-ups in electronics, computers, and biotech.

"[W]e do feel gratified because of the contributions we've made in areas which other types of capital have neglected," Rockefeller told The Wall Street Journal on July 15, 1959.

The idea that high-tech industries required specialized investment was central to the mission of American Research & Development Corp., founded 1946 and considered the first true venture-capital firm.

Physicist Karl Compton, an ARD founder and Massachusetts Institute of Technology president, described new industries as "babies...their parents are science and invention."

To grow and prosper, "they need shelter and nourishment, which they take in the form of patent protection, financing, and the chance of reasonable profits," he wrote in a Dec. 16, 1934, New York Times article.

The success of ARD's 1957 investment of $70,000 in Digital Equipment Corp. popularized the venture-capital model, and regulatory changes that opened the door to private equity (1958) and pension funds (1979) fueled a VC boom.

Writing about venture giants such as Warburg Pincus, J.H. Whitney, and Bain Capital, The Wall Street Journal on Sept. 7, 1989, reported that total assets under management by VC firms ended the previous year at $32 billion, having doubled in five years.

At the end of 2024, the figure was $1.3 trillion, according to the National Venture Capital Association. Three-quarters of VC deal activity is now in AI and machine-learning ventures.

And -- circling back to "Slater the Traitor" -- industrial espionage is also proliferating, as individuals and nations look to gain through subterfuge. Sometimes the old ways are still the best.

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