This is a lecture on capitalism, entrepreneurship, and international finance. The seminal ideas came from Dick Smick who is privy to many events and upheavals in intl finance. He had a book on "The World is Curved" He describes in broad stroke the role of entrepreneurship in international finance , and how finance shapes entrepreneurship

1. Entrepreneurial
Capitalism

2. Entrepreneurial
Capitalism
What moves the
world now

3. Theme of book
The World is Curved
by David Smick

5. David M. Smick

6. Broad theme of
entrepreneurial capitalism
is present in modern
international capital and
finance

7. Flow of capital is
bigger and more
important than flow of
goods

8. Trillions of dollars
can move across the
globe instantly

9. This ocean of cash
does not have
boundaries, political
nor religious
affiliations

10. It simply follows the
dictum for capital

11. Return on capital
and return of
capital

12. Some history

13. Deutsche Bank
established by Georg
Siemens in 1870

16. A bank for entrepreneurs:
find entrepreneurs
fund entrepreneurs
forcing organized
management techne

18. JP Morgan in US

20. Growth of
entrepreneurial
capitalism in US
under Pres. Reagan

22. Reaganomics – supply
side economics

26. Jack Kemp,
Charlie Wilson
and
Kemp Roth Act of 1

27. According to a Forbes
article, Jack Kemp, a NY
representative and
Charlie Wilson saved USA!

29. This was proven true under
French President Sakorzky of
France and in UK when they
imposed higher taxes on the
rich

31. Lowering of capital gains tax:
(from 28% to 20%)
Growth in number of VC (2x)
DJIA averaged 11% Returns
form l983 to 2003
vs only 1% from 1965 to 1983

32. The Laffer curve

33. Fall of Berlin Wall
in l989

34. Reunification’s impact on
German currency, business
and economics

37. Mergers and acquisitions
forced many German
companies to reduce costs
and be competitive; work
around pro Labor policies

38. German companies
were forced to be
entrepreneurial by new
capital

39. Reason for the
strengthening of German
deutsche mark

40. Why Japan lags behind in
entrepreneurial activities?
(even IMF is worried about
Japan’s huge debt vs GDP)

41. Japan’s fiscal outlook –
another pending tsunami?

42. Large conservative
banks in Japan do not
lend to entrepreneurs

43. Conservative
Japanese banks

44. Japan’s sumo sized
debts

45. US continues to attract capital
because it is perceived to be
the leader in entrepreneurship

46. Role of Venture
Capital and Hedge
Fund

47. Venture capital

48. Venture capital
structure
FUND PROVIDERS VENTURE CAPITAL FIRMS INVESTOR FIRMS
Money
Limited Partners
Pension Funds
Individuals
Corporation
Insurance Company
Foreign Endowments
80% of
Capital Gains
+
Principal
Source: Bygrave and Shulman (1988)
3% Annual Fee
General Partners
20% of Capital
Gains
IPOs/Mergers
Equity
Money
Entrepreneurs
Information
Information

49. Top VC firms

50. Hedge funds lead in
entrepreneurial capitalism
Hedge Fund Structure
What Does Each Party Bring to the Table?
Outside Investors
(Limited Partners)
General Partner
(LLC)
Firstcominvest,
S.A.
(LLC)
Investment A
Investment B
Investment C
Investment D
Hedge Fund
(LP)
Portfolio
Cash
Cash
Strategic
Direction
Trades

51. Viewed as the riskiest and difficult
to regulate financial organization

52. Hedge funds preferred
strategies

53. Growth of hedge funds

54. Rising anti entrepreneurial
public policies
• Overregulation
• increasing employment
cost
• increase of taxes
• intrusion into privacy
• limits to foreign ownership

55. Growing protectionism

56. Anti trade policies
Rising protectionism
Class war thru taxation

57. Protectionism on the
rise

58. Governments are puny to
control capital flows

59. Asset size of Central Banks vs
capital funds (hundred trillions of
dollar)

60. China and
entrepreneurial
capitalism

61. China’s Central banks and
role in China’s
entrepreneurship

62. China’s investment worldwide
(not just private investments!)

63. China’s state enterprises

64. Government
entrepreneurship:
• Singapore
• Malaysia
• Discovery Fund in NYC

65. Charles Millard of NYC
Economic Development Council

66. Koh Bon Hwee – former CEO
of Singapore Telecom,
Singapore Airlines, Singapore
Development Bank

67. Credit
Prepared by:
Prof Jorge Saguinsin
Ateneo Graduate School of Business
www.profjorgeentrep-jorge.blogspot.com