Georges Doriot
Encyclopedia
Georges F. Doriot 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
), Singapore
and Abu Dhabi
, 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), 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.
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)
.)
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%). Until his death, Doriot remained friends with Ken Olsen
, Digital's founder.
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".
Doriot died of lung cancer in 1987 in Boston, Massachusetts.
American Research and Development Corporation
American Research and Development Corporation was a venture capital and private equity firm founded in 1946 by Georges Doriot, the "father of venture capitalism" , with Ralph Flanders and Karl Compton .ARDC is credited with the first major venture capital success story when its 1957 investment of...
, the first publicly owned venture capital firm. In 1957, he founded INSEAD
INSEAD
INSEAD is an international graduate business school and research institution. It has campuses in Europe , Asia , and the Middle East , as well as a research center in Israel...
, a top tier business school with campuses in Fontainebleau
Fontainebleau
Fontainebleau is a commune in the metropolitan area of Paris, France. It is located south-southeast of the centre of Paris. Fontainebleau is a sub-prefecture of the Seine-et-Marne department, and it is the seat of the arrondissement of Fontainebleau...
(France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
), Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
and Abu Dhabi
Youth, education and military service
Born in ParisParis
Paris is the capital and largest city in France, situated on the river Seine, in northern France, at the heart of the Île-de-France region...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
in 1899, Doriot enlisted in the French army in 1920. He immigrated to America to earn an MBA
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
and stayed on, becoming a professor at the Harvard Business School
Harvard Business School
Harvard Business School is the graduate business school of Harvard University in Boston, Massachusetts, United States and is widely recognized as one of the top business schools in the world. The school offers the world's largest full-time MBA program, doctoral programs, and many executive...
in 1926. He became a U.S. citizen in 1940 and the following year was commissioned a lieutenant colonel
Lieutenant colonel
Lieutenant colonel is a rank of commissioned officer in the armies and most marine forces and some air forces of the world, typically ranking above a major and below a colonel. The rank of lieutenant colonel is often shortened to simply "colonel" in conversation and in unofficial correspondence...
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
Brigadier General
Brigadier general is a senior rank in the armed forces. It is the lowest ranking general officer in some countries, usually sitting between the ranks of colonel and major general. When appointed to a field command, a brigadier general is typically in command of a brigade consisting of around 4,000...
.
ARDC and the Father of Venture Capital
In 1946 Doriot returned to Harvard and the same year he founded American Research and Development CorporationAmerican Research and Development Corporation
American Research and Development Corporation was a venture capital and private equity firm founded in 1946 by Georges Doriot, the "father of venture capitalism" , with Ralph Flanders and Karl Compton .ARDC is credited with the first major venture capital success story when its 1957 investment of...
(ARDC), one of the first two venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
firms along with Ralph Flanders
Ralph Flanders
Ralph Edward Flanders was an American mechanical engineer, industrialist and Republican U.S. Senator from the state of Vermont. He grew up on subsistence farms in Vermont and Rhode Island, became an apprentice first as a machinist, then as a draftsman, before training as a mechanical engineer...
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.
In 1957, Doriot founded INSEAD
INSEAD
INSEAD is an international graduate business school and research institution. It has campuses in Europe , Asia , and the Middle East , as well as a research center in Israel...
, international graduate business school
Business school
A business school is a university-level institution that confers degrees in Business Administration. It teaches topics such as accounting, administration, economics, entrepreneurship, finance, information systems, marketing, organizational behavior, public relations, strategy, human resource...
in France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
with a group of his former Harvard MBA students. (Today, INSEAD is one of the major business schools, with campuses in Fontainebleau (France)
Fontainebleau
Fontainebleau is a commune in the metropolitan area of Paris, France. It is located south-southeast of the centre of Paris. Fontainebleau is a sub-prefecture of the Seine-et-Marne department, and it is the seat of the arrondissement of Fontainebleau...
.)
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
Internal rate of return
The internal rate of return is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return or the rate of return . In the context of savings and loans the IRR is also called the effective interest rate...
of 101%). Until his death, Doriot remained friends with Ken Olsen
Ken Olsen
Kenneth Harry Olsen was an American engineer who co-founded Digital Equipment Corporation in 1957 with colleague Harlan Anderson.-Background:...
, Digital's founder.
Later years
ARDC continued investing until 1971 with the retirement of Doriot. In 1972, Doriot merged ARDC with TextronTextron
Textron is a conglomerate that includes Bell Helicopter, E-Z-GO, Cessna Aircraft Company, and Greenlee, among others. It was founded by Royal Little in 1923 as the Special Yarns Company, and is headquartered at the Textron Tower in Providence, Rhode Island, United States.With total revenues of...
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".
Doriot died of lung cancer in 1987 in Boston, Massachusetts.
Legacy
- The Doriot Climatic ChambersDoriot Climatic ChambersThe Doriot Climatic Chambers are a pair of very large, highly specialized wind tunnels/environmental chambers located at the U.S. Army’s Soldier Systems Center in Natick, Massachusetts...
at the U.S. Army Soldier Systems CenterU.S. Army Soldier Systems CenterThe United States Army Soldier Systems Center is a military research complex and installation in Natick, Massachusetts charged by the U.S. Department of Defense with the research and development of food, clothing, shelters, airdrop systems, and other servicemember support items for the U.S....
, Natick, MassachusettsNatick, MassachusettsNatick is a town in Middlesex County, Massachusetts, United States. Natick is located near the center of the MetroWest region of Massachusetts, with a population of 33,006 at the 2010 census. Only west from Boston, Natick is considered part of the Greater Boston area...
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 lawyerLawyerA lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
s." - "Someone, somewhere, is making a product that will make your product obsoleteObsolescenceObsolescence is the state of being which occurs when an object, service or practice is no longer wanted even though it may still be in good working order. Obsolescence frequently occurs because a replacement has become available that is superior in one or more aspects. Obsolete refers to something...
." - "When traveling, always adopt the psychology of a suitcase."
See also
- American Research and Development CorporationAmerican Research and Development CorporationAmerican Research and Development Corporation was a venture capital and private equity firm founded in 1946 by Georges Doriot, the "father of venture capitalism" , with Ralph Flanders and Karl Compton .ARDC is credited with the first major venture capital success story when its 1957 investment of...
- History of private equity and venture capitalHistory of private equity and venture capitalThe history of private equity and venture capital and the development of these asset classes has occurred through a series of boom and bust cycles since the middle of the 20th century. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital...
- Private equityPrivate equityPrivate equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
- Leveraged buyoutLeveraged buyoutA leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...