Is venture capital an art or a science and has it brought good to the world? These are the main questions asked by Sebastian Mallaby, a British author writing chiefly about an American business arena. Sixty years after it took off in the United States, venture capital is a mode of finance that remains relatively undeveloped over here. For that reason, we had better begin by defining it for British readers.

So here goes: venture capital is about backing start-up businesses, often long before they or their founder-entrepreneurs have a tested product or proven track record. It’s not to be confused with private equity, which is about financial engineering undertaken to extract profit from businesses that have already climbed a couple of rungs up the ladder. Nor does it have anything to do with established corporations investing in new technologies.

Rather, it’s about financiers betting on mavericks with novel ideas – and in Mallaby’s exhaustively researched book, it emerges very much more as art than as science. The ‘Power Law’ of his title refers to the fact that within any venture capital portfolio, many investments will go to zero, having failed completely, but one or two might generate returns