Key Developer of Venture Capitalism
General Georges Doriot 1899-1987

During the 1930s and '40s, economists were concerned that not enough new businesses were being developed, and that there were not enough public funds available to do so.

Georges Doriot, a French immigrant who was a popular Harvard Business School professor, became a General in the U.S. Army Quartermaster Corps in World War II. He improved army efficiency by instituting new ideas like organizing a system for making shoe soles out of reclaimed rubber, and bankrolling the development of freeze-dried foods and armored vests. After his return to Cambridge in 1946, he applied his techniques to the financial world. He founded American Research & Development Company (ARD) in 1946 with private equity from MIT and the John Hancock Mutual Life Insurance Company. Doriot realized that by the 1940s most funds were held by large financial institutions rather than by individuals. The idea behind ARD was that a "venture capital" firm would raise money for new technology by selling its stock to investors, mainly old-money institutions like insurance firms and investment trusts.

A decade after ARD's founding, it was barely breaking even. Then the company lent $70,000 to two MIT graduates working on building computers. Digital Equipment and Ken Olsen went on to pioneer the minicomputer industry. By 1967 ARD's investment in Digital was worth $140 million.

The success of General Doriot's firm led to an explosion of venture capital in the 1980s and '90s.

Today's Boston venture capitalists bring together innovation and finance at levels which give startup companies the chance to become the city's future innovators.

  DEC is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment Corporation by Edgar H. Schein et al., 2003