Anyone can start an Internet company in his garage. But until now, only institutions and the seriously wealthy could easily invest in an early-stage company. Suddenly, that's changing.

Draper Fisher Jurvetson, one of the leading Silicon Valley venture-capital firms, announced today that it is setting up a closed-end investment fund that will trade on the New York Stock Exchange. The $500 million raised by the fund will be invested by Draper in information technology start-ups.

"I have always felt it wasn't quite right that you had to be a millionaire--what the Securities and Exchange Commission calls a 'sophisticated investor'--to invest in venture capital," said Tim Draper, founder of Draper Fisher Jurvetson. "This program allows ordinary people to do it too."

Venture capitalists are the private bankers of Silicon Valley. Their funds, assembled with money from university endowments, pension funds and well-heeled individuals, invest in companies that are often little more than notions. Historically, this has been a very risky enterprise, with as many as eight out of 10 of the companies failing.

The Internet changed those odds. The returns that venture capital have been generating make the highflying Nasdaq composite look as staid as a government bond. Accel Partners, to give only one example, recently said that its investments of $56 million were now worth $5 billion.

Don Luskin, manager of Open Fund, an interactive mutual fund, noted that Draper's idea isn't quite unprecedented. Publicly traded companies, ranging from the tiny Harris & Harris Group Inc. to the much larger CMGI Inc. (owner of the AltaVista search engine as well as many other things), function as investors in Internet start-ups. But Luskin said this was the first time a major venture capitalist had joined the process itself.

"This is an absolute unqualified good," Luskin said. "It's part of this whole movement of the democratization of investments. Opportunity that previously had been hoarded by the rich and powerful is now available to the man on the street."

Michael Perkins, coauthor of the new book "The Internet Bubble," also saw this as part of a trend, but a more unnerving one.

"It's just more capital flowing into more start-ups, some of which may not justify being funded in the first place," Perkins said. "There's already too much money chasing too few good ideas. How many more pet-supply companies or online drugstores do we need?"

But Draper said, "There are plenty of opportunities out there. We get 20,000 business plans a year, and only fund 15. We could easily fund more than that."

Among the successful Draper investments are Hotmail, which was sold to Microsoft Corp. for $400 million, and Kana Communications Inc., an e-mail service provider whose stock price has nearly quadrupled since its September debut.

Even without the public's money, the venture-capital funds are growing ever larger--although not nearly as large as their investors wish. Both Accel and Redpoint Ventures said they had received offers totaling more than $1 billion for their new funds, although they both ultimately decided not to take in quite so much. Draper said his next private fund, to be launched in April, would probably clear $1 billion.

Total Internet investment by venture capitalists in the third quarter was $5.5 billion, more than double the level in last year's third quarter, according to VentureOne.

Draper's fund will be done in collaboration with a new Internet start-up, an investment firm largely funded by Draper called To buy at the offering price of $25 a share, investors will have to demonstrate an annual income of at least $50,000 as well as $50,000 in net assets.

After six months, the shares will trade on the New York Stock Exchange as a closed-end fund available to all. Unlike ordinary mutual funds, closed-end funds can trade at either a discount or premium to their underlying asset value, depending on the whim of the market. Since the fund will be a registered security, the SEC restrictions on private venture capital are not applicable.

Draper said this is just the beginning. "There are so many restrictions on this type of fund that, if I felt it wasn't a bet on the future, I never would have done it," he said. "There could be a day where individuals' money represents a real significant part of the venture business."