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Chapter 2. Destroyed by the Bubble > The Early-Stage Financing of the Internet

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 the computers of research agencies of the government and of government contractors. BBN used packet switching technology to build the network, the Internet. This was the network that was called DARPANET, and building it was a major technological stretch. At the time Bell Labs thought it couldn't be done, and so didn't bid on the Defense Department contract. BBN also developed the server that made the network possible, and labeled it the Interface Message Processor.


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