BWWhen people around the world try to explain the American system of entrepreneurship, they often point to venture capital. True enough, the venture capital ecosystem has nurtured startups that became household names—among them Apple (AAPL), Cisco (CSCO), Google (GOOG), Microsoft (MSFT), and Starbucks (SBUX). For much of the 1990s and thereafter, venture capital was seen as the "secret sauce" of American entrepreneurship and an engine of job growth. In its heyday in 2000, VC investing reached an astonishing 1.1% of U.S. GDP.

But what if the prominence of venture capital—its branding as the essence of American innovation—turns out to be a phenomenon of the past?