On Friday evening, venture capital pioneer David Morgenthaler passed away at the age of 96 years-old. At the time, he was a patient of the Cleveland Clinic, an organization where he served on the board and finance committees for decades.
“It was not unexpected, but it was still a surprise,” says Gary Morgenthaler, David’s son who more than two decades ago opened a Silicon Valley office for David’s firm, then known as Morghenthaler Partners. “His last night with us he was very intently focused on how the Cavs were doing, and on his grandson’s new job.”
For many in today’s venture community, David Morgenthaler’s name may not mean too much. But without him, many of those folks would likely be in another line of work.
Morgenthaler, who grew up in rural South Carolina before attending MIT and joining the U.S. Army one day after the Pearl Harbor Attacks, was one of the original venture capitalists (back before VCs even called themselves VCs). But, more importantly, he helped form the National Venture Capital Association and was asked in 1975 to be its president. He said yes, on one condition: The organization, which then represented fewer than two dozen firms, would need to move its headquarters from Chicago to Washington, D.C., so that it could help pursue policies that would spur entrepreneurship.
“He felt that there was no particular incentive at that time to create new companies, because the risk was not commensurate with the reward,” Gary Morgenthaler explains.
The first lobbying effort was to create a lower tax rate for capital gains, which proved successful. Then, working with others, Morgenthaler helped change ERISA laws so that pension funds could invest in alternative assets like venture capital — a move that opened up massive amounts of new capital, coinciding with the personal computer revolution.
“Today it’s almost unthinkable for a small, meagerly-funded group to walk the halls of Congress and get laws changes, but my father and those he worked with did it,” Gary Morgenthaler says.
David Morgenthaler would go on to invest in such companies as Apple (RSH) and VeriFone (PAY), before focusing more on biotech healthcare in his later years (in part due to one of his sons getting cancer). His firm also would split up based on different strategies, with the West Coast venture unit now known as Canvas Ventures.
“He took great pride in the firm and in mentoring younger partners,” Gary Morgenthaler adds. “But he also stayed interested in the latest technology. You’d see him in the Cleveland Clinic playing with an Apple Watch, learning all the functionality. What other 96 year-old does that?”
Rest in peace David. The country is better for your contributions.