East India Company’s Formation and Financing



Updated February 11, 2023

The founding of the EIC at a meeting in September 1599 brought together a group of investors whose participation in risky new overseas ventures drove England’s commercial and imperial growth. The establishment of the EIC depended on the investors’ decision to entrust their wealth and reputation to a company with no track record, limited state support, and no presence in the Asian markets in which it would operate. Investing substantial sums in the EIC must have been a frightening and highly risky choice, especially for inexperienced investors.*

Despite the impact that the EIC would have on finance, investment, and empire over the next two centuries, we continue to treat the EIC as a homogeneous, monolithic enterprise rather than as an organization composed of and dependent upon what is today seen as venture capitalist and angel investor networks—a collective of investors who, either as individuals or collective groups, invest their money into high-risk, high-reward potential companies for an equity stake, which, in the case of the EIC, the company’s management team transformed into goods that were vendible or convertible into spices that could be sent back to Europe and sold there.

The EIC’s formulation occurred within an intensely interconnected environment that helped create an investing public before the financial revolution, demonstrating that early variants of venture capital-style investments were being made long before the maritime pursuit of whaling. The 1599 petition, which included “the names of such persons to undertake the voyage to the East Indies,” mentioned 101 contributions ranging from £100 to £3,000, and totaling £30,1336. There was a varied cross section of contributors, comprising both new and inexperienced investors and those with significant investment experience. The most common contribution was £200, with 58 investors (57.4%) pledging this sum. The average contribution size was slightly more than £298. Further analysis of the 101 investments reveals that several commitments were from pairs or small groups. Thirty-six of the total contributions (35.6%) were made in this way. Separating these grouped contributions reveals 136 named investors, although the total number of investors would have been slightly higher because some are not named and are merely listed as investing “in company” with another individual.*

Diverse types of relationships brought individuals together to invest, and novice investors were likely and able to follow the lead of more seasoned partners. Among the investors, 82 had never invested before, while 54 had participated in previous ventures. Through familial ties, livery company connections, and shared business experience, investors in early-modern London formed overlapping networks that supported the EIC. These networks enabled investors to discuss the trade with seasoned investors, spread their risk with reputable partners, and acquire the necessary expertise to engage in previously impossible ventures. Thus, also allowing the EIC to draw upon the expertise and financial resources of investors including some who had traded, raided, explored, settled, stolen, and fought across much of the globe. This methodology of following experienced lead investors who are able to conduct appropriate due diligence into the company requiring investment persists across venture deals today.

Mechanisms of Venture Financing: Funding Individual Voyages

Composite investment strategies that relied on accumulating small parcels of goods and currency to establish commercially viable cargo financed early capital-intensive voyages. Cargoes were separated into shares to raise additional finance. Shipowners and merchants used several strategies to limit financial risks and make investments more attractive.

Multiple shareholders owned split shares of a single cargo, defined by allotting proportions of space within the ship’s hold. Seamen were often remunerated with free cargo space instead of wages to reduce costs further and keep profits high. Individual investments in cargoes, including enslaved people, were also divided, enabling many people to contribute small amounts to a single commercial mission.

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