Georges Doriot

Georges F. Doriot (September 1899 – June 1987) was one of the first American venture capitalists. In 1946, he founded American Research and Development Corporation, the first publicly owned venture capital firm. In 1957, he founded INSEAD, a top tier business school with campuses in Fontainebleau (France) and Singapore.

Biography

Youth, education and military service

Born in Paris, France in 1899, Doriot enlisted in the French army in 1920. He immigrated to America to earn an MBA and stayed on, becoming a professor at the Harvard Business School in 1926. He became a U.S. citizen in 1940 and the following year was commissioned a lieutenant colonel in the United States Army Quartermaster Corps. As Director of the Military Planning Division, he worked on military research, development and planning, eventually being promoted to brigadier general.

ARDC and the Father of Venture Capital

In 1946 Doriot returned to Harvard and the same year he founded American Research and Development Corporation (ARDC), one of the first two venture capital firms along with Ralph Flanders and Karl Compton (former president of MIT), to encourage private sector investments in businesses run by soldiers who were returning from World War II. ARDC's significance was primarily that it was the first institutional private equity investment firm that accepted money from sources other than wealthy families although it had several notable investment successes as well.^[1]

In 1957, Doriot founded INSEAD, international graduate business school in France with a group of his former Harvard MBA students. (Today, INSEAD is one of the major business schools, with campuses in Fontainebleau (France) and Singapore.)

ARDC is credited with the first major venture capital success story when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be valued at over $355 million after the company's initial public offering in 1968 (representing a return of over 500 times on its investment and an annualized rate of return of 101%).^[2] Until his death, Doriot remained friends with Ken Olsen, Digital's founder.

Later years

ARDC continued investing until 1971 with the retirement of Doriot. In 1972, Doriot merged ARDC with Textron after investing in over 150 companies. For his role in the founding of ARDC Doriot is often referred to as the "father of venture capitalism".^[3][4]

Doriot died of lung cancer in 1987 in Boston, Massachusetts.

Legacy

• The Doriot Climatic Chambers at the U.S. Army Soldier Systems Center, Natick, Massachusetts were named in his honor in 1994. (During his time in the US Army, Doriot had written and spoken about the need for an "Institute of Man" for the testing of soldiers and their equipment at environmental extremes. The DCCs are seen as a partial fulfillment of that vision.)

Quotes

• "Without actions, the world would still be an idea."
• "Be friendly but not chummy with your lawyers."
• "Someone, somewhere, is making a product that will make your product obsolete."
• "When travelling, always adopt the psychology of a suitcase."

See also

• American Research and Development Corporation
• History of private equity and venture capital
• Private equity
• Leveraged buyout

Further reading

• Ante, Spencer E. (2008). Creative Capital: Georges Doriot and the Birth of Venture Capital. Cambridge, MA: Harvard Business School Press. ISBN 1422101223. 

References

v • d • e Private equity and venture capital investors Investment Strategy Buyout · Venture · Growth · Mezzanine · Secondaries History History of private equity and venture capital · Early history of private equity · Private equity in the 1980s · Private equity in the 1990s · Private equity in the 2000s Investor types Private equity investors · Venture capitalists · Corporate raiders