American Research and Development Corporation
Encyclopedia
American Research and Development Corporation was a venture capital
and private equity
firm founded in 1946 by Georges Doriot
, the "father of venture capitalism" (former dean of Harvard Business School
), with Ralph Flanders
and Karl Compton (former president of MIT).
ARDC is credited with the first major venture capital success story when its 1957 investment of $70,000 in equity and approximately $2 million in loans in Digital Equipment Corporation
(DEC) became valued at many times the amount invested after the company's success after its initial public offering in 1966.
ARDC continued investing until 1971 with the retirement of Doriot. In 1972, Doriot merged ARDC with Textron
after having invested in over 150 companies.
Former employees of ARDC have gone on to found several prominent venture capital firms including Greylock Partners (founded in 1965 by Charlie Waite and Bill Elfers) and Morgan, Holland Ventures, the predecessor of Flagship Ventures (founded in 1982 by James Morgan).
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...
and private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
firm founded in 1946 by Georges Doriot
Georges Doriot
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...
, the "father of venture capitalism" (former dean of 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...
), 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).
ARDC is credited with the first major venture capital success story when its 1957 investment of $70,000 in equity and approximately $2 million in loans in Digital Equipment Corporation
Digital Equipment Corporation
Digital Equipment Corporation was a major American company in the computer industry and a leading vendor of computer systems, software and peripherals from the 1960s to the 1990s...
(DEC) became valued at many times the amount invested after the company's success after its initial public offering in 1966.
ARDC continued investing until 1971 with the retirement of Doriot. In 1972, Doriot merged ARDC with Textron
Textron
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 having invested in over 150 companies.
ARDC's legacy
The firm was originally founded 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 investment successes as well.Former employees of ARDC have gone on to found several prominent venture capital firms including Greylock Partners (founded in 1965 by Charlie Waite and Bill Elfers) and Morgan, Holland Ventures, the predecessor of Flagship Ventures (founded in 1982 by James Morgan).
See also
- 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...
- Venture capitalVenture capitalVenture 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...
- Georges DoriotGeorges DoriotGeorges 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...