Velvet Underground is arguably the grandaddy of punk. When their first LP appeared in early 1967 (which was produced by Andy Warhol), it was so different that no one could pin a genre on the band at the time. While everyone else was caught on with psychedelia, and the flower-power scene out in the West Coast, Lou Reed and the rest of the band were writing songs that dealt with taboo subjects (drug use, sadomasochism, etc) and the inner-city realities of the New York scene. VU was really ahead of their time when they first appeared, and as a result, initial album sales was sparse at best. As Roxy Music's Brian Eno later said: " No one bought any of (VU) records, but those who did, formed bands"

Check out this link:
http://en.wikipedia.org/wiki/The_Velvet_Underground