Venture capitalism-an outcome of the ICT Revolution which made its appearance first in the US during the late 1970s and early 1980s and then in other countries including Israel during the 1990s- has created a new product: knowledge-intensive property rights that bundle knowledge with equity rights.

These can be traded in highly effective ‘surrogate ' knowledge markets e.g. NASDAQ which avoid many of the well known imperfections of 'unbundled ' knowledge markets. We elaborate the hypothesis that venture capitalism is based upon the identification of economies of scope in the transactions of technological knowledge bundled with managerial competence, reputation, screening procedures and finance, on both the demand and the supply side. A new knowledge governance model has emerged, based upon start up companies which specialize in ‘invention ' and technological change, specialized intermediaries supporting this new segment of companies; the creation of new financial markets, both public and private, specialized in knowledgeintensive property rights; and underpinning institutional changes. We argue that this model, which radically changes our perception of a country 's national system of innovation, is or could be a powerful mechanism for the production, dissemination and integration of knowledge in advanced capitalistic economies, and thereby a main driver of 'knowledge-based' growth. If further research confirms this view this may have profound implications both for the generally established view of 'knowledge underproduction' and for IPR and R&D policy.