Reviewed by: Chan Chao Peh

Venture capitalism (VC), in various forms, has been around for centuries -- just think of the royal sponsors of raiders that prey on ships of a different flag, who were not necessarily flying the skull and bones.

Fast forward a few centuries and the general awareness and understanding of VC today is dominated by the few excellent bets (purely measured by financial returns) made by a handful of firms in (almost without exception) technology stars like Google, Apple and Yahoo!.

BusinessWeek journalist Spencer Ante attempts to trace the birth of VC as we know it today and takes readers one chapter back in the history of the industry and focuses on one man Georges Doriot. Although his name is not as recognisable as the star investors of today, he is, nevertheless, a person that anyone with interest in the world of finance and economics should be aware of as the Ante's book Creative Capital -- Georges Doriot and the Birth of Venture Capital tells us.

Who is Doriot? A Frenchman, who like many before and after him, migrated to the US for a better life. He stumbled into business academia, rose to the top of his profession as a professor in arguably the best institution of its kind, especially in his era -- Harvard Business School, earning a reputation as a maverick professor along the way. His "flagship" class, dully named "Manufacturing", drew the crowds -- never mind his strict requirement that students (all men, then) must be in formal suits and ties.

When World War II erupted, Doriot was called to service away from the ivy-covered halls of Harvard, not as a mere commander on the frontlines, but an organisational and operational wizard that helped leverage the US' industrial might, helping to push through the development and production of seemingly mundane items (like boots) that made a soldier's life infinitely better, and thus, helping to win the war.

Last but not least among his achievements, Doriot's crowning glory and passion was the founding of American Research and Development (ARD), the first public VC, and of course, ARD's best bet ever: a US$70,000 ($95,396) investment in Digital Equipment Corp, which returned 500 times in just nine years. Amid all this, Doriot also managed to find time to go back to France and help push for and set up Insead, which today rivals Harvard.

Today, Digital is no longer around, subsumed into Hewlett-packard after two quick rounds of mergers and acquisations that are now the norm. But, the tale of how Doriot, through ADR, discovered, appreciated and invested in Digital, is the shiniest example of the power and influence that venture funds can have in making the difference between promising companies that can grow, and those that do not survive past childhood.

Plenty of mention is given to the far reaching influence Doriot had on Harvard Business School, his popularity (or lack of it) with the students and his colleagues in the faculty. Let's not forget that his bigger influences, which include the very much behind-the-scenes tussle with the regulators who did not fully appreciate what he was doing. It was partly through his contacts with the likes of the Stock Exchange Commission back then, which resulted in a more conducive environment for imitators to ADR, amd later on, the big shift of VCs to Silicon Valley and the West Coast, in general.

At a lower level, Creative Capital is an extensively-researched painting of an era that wasn't too long ago. Doriot and his associates hark back to a time when MBAs were expected to become managers in traditional industries in manufacturing. This is a huge contrast to the MBAs of recent years, who only want to present their resumes to recruiters from consulting firms or Wall Street.

There are also numerous accounts of Doriot's shortcomings and bad decisions that make this character a more human one. One notable example: He neglected to groom and name a clear successor for ADR, even though his extremely close ties with numerous younger colleagues, who were also ex-students, presented no shortage of candidates. Just blame this on his burning passion for what he was doing.

Surprisingly, this is not a book that goes on relentlessly about the rough and tumble world of investment and finance; the author devotes many pages to Doriot's relationship with his wife of nearly half a century, Edna. Just as she did in real life, Edna played an important supporting role throughout the book.

One third history, one third management and one third biography, Creative Capital is a very human potrait of Doriot, who at times appear quirky and even eccentric. But more importantly, it serves as a reminder to readers that without Doriot there would be no VC industry in its form today and the countless entrepreneurs and their companies would not have thus benefited. The business world would not be as rich as it is, in more than one sense of the word.