For a few years, I tried to raise investment capital in the UK. It was brutal.
The idea was fine. The people I pitched were smart and asking the right questions. But the capital itself was scarce, and the people holding it were risk-averse in a way that felt structural. Round after round, the same answer: interesting, come back when you have traction.
Go to the US and the script flips. The money is not just available, it is impatient. Founders in San Francisco do not spend months proving themselves. They pitch, get a term sheet, and build. Sometimes it works. Often it does not. But the willingness to fail is built into the system.
This difference is usually described in cultural terms. Americans are more optimistic. Europeans are more cautious. There is some truth to that, but culture is downstream of incentives. The real difference is structural: the United States has a lot of billionaires, and the United Kingdom does not.
The Concentration That Makes Risk Possible
Imagine two societies.
Society A has 1,000 people worth $10 million each. Society B has 10 people worth $1 billion each. Total wealth is the same: $10 billion.
Society A can fund 1,000 small bets. A new restaurant here, a local hardware store there. Each bet is safe, incremental, and unlikely to transform anything. The capital is spread thin, and no single person can afford a real gamble.
Society B can fund ten enormous bets. A rocket company. A nuclear reactor design. A foundation model for AI. A drug discovery pipeline that might return nothing for fifteen years. Nine of those bets might fail, and the tenth could change the world.
The US is closer to Society B. Europe is closer to Society A.
The venture capital numbers reflect this. US venture capital investment in 2024 was roughly $170 billion. All of Europe combined was around $45 billion. The UK, the largest European market, was about $15 billion. On a per-capita basis, the US invests roughly four times more in high-risk early-stage companies than Europe does, and the gap has been widening for a decade.
None of this is surprising. It is the direct result of concentrated private wealth choosing where to place its bets.
The Investors Who Lose Their Own Money
The other half of the story is who does the choosing. Government investment exists in both the US and Europe, but it works differently.
A government department making a $500 million bet on a green hydrogen project is spending other people’s money. The civil servant who approved it faces no personal downside if it fails. The minister who announced it will have moved on to a different portfolio by the time the write-off lands. The cost is diffused across millions of taxpayers, most of whom will never know they paid for it.
A billionaire making a $500 million bet on a space company is spending their own money. If it fails, they are $500 million poorer. That concentrates the mind in a way no government process can replicate.
Billionaires make bad bets constantly. The venture capital failure rate for early-stage companies is around 75 percent. Most of that money is lost. But the people who lose it are the same people who decided to risk it. The feedback loop is tight.
Government-funded failures do not produce the same signal. When Solyndra collapsed after receiving a $535 million federal loan guarantee, the officials who approved it did not lose any personal wealth, and the loan program continued. When a venture capitalist loses $100 million on a bad solar bet, they stop funding solar for a while. The market learns. The government does not.
This is not about whether billionaires are better investors than civil servants. They are not, on average. The advantage is structural. Private capital fails in a way that produces useful information. Government capital fails quietly.
The Philanthropy That Follows
The same concentration that funds risky ventures also funds everything else. US philanthropy totaled roughly $560 billion in 2024, more than the GDP of most countries. A significant fraction came from the ultra-wealthy.
The Gates Foundation has spent over $80 billion on global health since 2000. The Howard Hughes Medical Institute funds basic biological research at a scale no European government program matches. American museums, orchestras, and universities are heavily endowed by private wealth in a way that their European counterparts are not.
The Carnegie libraries are the historical example everyone knows. The pattern continues with Bloomberg Philanthropies funding public health initiatives worldwide, the Open Society Foundations supporting civil society globally, and the Chan Zuckerberg Initiative funding biomedical research.
You cannot have this without concentrated wealth. A society of 100 millionaires each giving $10,000 produces $1 billion in philanthropy. A society of 10 billionaires each giving $100 million produces the same total, but the projects that receive it are different. The large gifts endow institutions. The small gifts pay for programs. Both are useful, but they are not interchangeable.
The question is what happens to the capital, not whether billionaires deserve their wealth. In practice, a significant share of it funds things that would not otherwise exist.
The Trade-Off Nobody Wants to Name
There is an uncomfortable truth that neither the left nor the right likes to acknowledge.
The left wants to tax concentrated wealth out of existence. Higher top marginal rates, wealth taxes, inheritance taxes, carried interest reform. These policies have their merits, but they also have a consequence: they reduce the pool of capital available for high-risk, long-time-horizon investment. The SpaceXs and the Modernas and the OpenAI start-ups will not be funded by tax revenue. They are funded by people who can afford to lose the entire bet.
The right wants to celebrate billionaires as job creators and visionaries. This is also incomplete. Many billionaires inherited their wealth. Many operate in protected or regulated industries where competition is limited. The connection between wealth and social contribution is real but not automatic. The right ignores the rent-seekers.
The honest position is that concentrated wealth produces real benefits and real costs, and you cannot eliminate one without eliminating the other.
France tried a wealth tax (the ISF) from 1982 to 2017. The result was roughly €200 billion in capital flight and no measurable reduction in inequality. The tax was eventually replaced with a narrower tax on real estate only, after the damage was done. The billionaires who left France took their capital, and the risky investment they might have funded, with them.
The UK is now considering a similar wealth tax. If history is any guide, it will raise less revenue than expected, drive capital abroad, and reduce the pool of private investment available for the ventures that need it most. That does not mean it cannot be done. It means the people proposing it should be honest about what they are trading away.
The Bottom Line
The United States leads the world in risky, transformative investment. The United States has a lot of billionaires. These two facts are connected.
Acknowledging that billionaires serve a capital-allocation function that cannot be easily replaced is not the same as defending their wealth or their behavior. But the debate about inequality will remain shallow as long as it refuses to look at what the capital actually does.
The 98 percent of value that entrepreneurs leave for the rest of us - the cheaper goods, the better medicines, the new technologies - does not materialize without someone willing to fund the 2 percent bet. In the current system, that someone is usually a billionaire. If you want to change the system, you need to explain how you will perform the same function without them.
That is a harder argument than “tax the rich.” It is also a more honest one.