Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble

The Early-Stage Financing of the Internet

Despite the role of the capital markets in supporting innovation in capitalist economies, many promising technologies do not get support. The Internet, for example, was developed in two major stages, neither of which had capital market funding. It was only years later, when the technologies were commercialized, that private capital came in. This was despite efforts of the original builders of the technologies to get private financial support for their capitalization.

In the late 1960s, Bolt, Braneck and Newman (BBN), a private research firm in Cambridge, Mass., received a contract from the American Defense Department's Defense Advanced Research Project Agency (DARPA) to build a network that would connect ...