The First Venture Capitalist was an Impact Investor
“So, we search for the exceptional man or woman, the entrepreneur. We become a partner in creating a dream. It is not a dream of just making money or creating capital gains. It is a dream of creating a company, a real business that changes our world.”
- Georges Doriot
I love innovation. I love start-ups. I love investors. If you feel the same, then you need to know the story of Georges Doriot. I know his story well because I have benefitted from his genius and entrepreneurship throughout my life.
By all accounts, he was an incredible man, often called the “Father of Venture Capital.” Born in France in 1899, he emigrated to the US, getting an MBA at Harvard Business School (HBS) and staying on as a professor there. He also rose to the position of General in the US army in World War II.
After the war, in 1946, he saw soldiers coming back from the war with little to no job prospects. Georges Doriot was probably one of the first impact investors because he founded the first venture capital firm with a primary objective to encourage private sector investments in businesses run by soldiers – to create jobs for them, to replace dying industries (like the textile industry), and to look to technology that would improve peoples’ lives. Driven by that motivation, he founded the American Research and Development Corporation (ARDC) in 1946, credited as the first venture capital firm.
ARDC's was the first institutional private equity investment firm that accepted money from sources other than wealthy families, with a good portion of its committed capital coming from insurance companies and educational institutions. 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. Not too bad.
During the same year as this impressive investment, 1957, Georges Doriot also went on to found INSEAD with some of his former HBS students as “a Business School born European” from the start and open to new cultures and ideas. Today, it’s one of the best business schools in the world.
The list of minds he influenced is mind-blowing!! They include the founders of Greylock Capital, Sequoia Ventures, Battery Ventures and Summit Partners, to name a few.
With these efforts he helped create one of the most innovative forms of investment that exists in the world today, founded with the idea that entrepreneurs can change the world.
He was totally focused on helping entrepreneurs do this.
How his work has touched my life:
- Georges Doriot went from France to the USA. I have gone from the USA to France.
- I went to Harvard, and he taught there.
- He founded the French Library in Boston, a vibrant institution, where I spent a lot of time before moving to Paris.
- When I started my career as a corporate lawyer in venture capital in Boston, I worked for a firm called Testa, Hurwitz & Thibeault, which was founded by Dick Testa. Dick went to Harvard Law School, and Georges Doriot was his mentor. Together, they created the 10-year VC fund structure that we still use today.
- I went to INSEAD to get my MBA and subsequently worked in the INSEAD Centre for Entrepreneurship for several years, the institution he founded.
- I work with venture capitalists and entrepreneurs on a daily basis today, focused on helping to build impactful products and services that will change our world for the better.
Merci, Georges!!
