how have regulatory changes boosted vc 
the small business investment act sbic in 1958 boosted the vc industry by providing tax breaks to investors in 1978 the revenue act was amended to reduce the capital gains tax from 49 to 28 13 in 1979 a change in the employee retirement income security act erisa allowed pension funds to invest up to 10 of their assets in small or new businesses 14 the capital gains tax was reduced to 20 in 1981 15 these developments catalyzed growth in vc and the 1980s turned into a boom period for venture capital with funding levels reaching 4 9 billion in 1987 16the bottom lineventure capital represents a central part of the lifecycle of a new business before a company can start earning revenue it needs start up capital to hire employees rent facilities and begin designing a product this funding is provided by vcs in exchange for a share of the new company s equity 