Over the last two weeks, I have been taking readers through the history of the private capital markets because I believe it is impossible to understand where this market is going without understanding how it developed.

In Week 1, I introduced the idea of The Market You Don’t See. Private capital is a major part of the financial system, yet most individual investors know considerably more about the public markets, real estate and crypto than they do about how private companies actually raise capital.

Last week, I went further back and described the traditional private capital market as a market that was largely “by appointment only.”

That phrase is important.

It does not mean private capital was inactive. Quite the opposite. Companies were being funded, businesses were growing, venture capital and private equity were deploying capital, and sophisticated investors were participating in private transactions.

What was different was how companies and investors found each other.

Relationships were central.

Investment bankers had networks. Broker-dealers had networks. Securities lawyers had relationships. Venture capital firms, private equity firms and family offices operated within their own circles. Entrepreneurs relied on existing investors and introductions.

The market worked, but access to information and opportunities was fundamentally different from what we experience today.

Then came the JOBS Act.

I believe there is a tendency to reduce the JOBS Act to one word: crowdfunding.

That misses the larger story.

The JOBS Act was not simply legislation that allowed companies to raise money online. It represented an important change in the relationship between capital formation, securities regulation, technology, companies and investors.

And we are still working through the consequences today.