article discusses, American Research & Development Corporation (ARD), venture capital, US success story, challenges changing government, policiesr venture capital institution. was felt for the first time, shortly after
the US stock market crash in 1929. The stock market crash led to decline of many
small and medium-scale companies, which raised questions on credibility of the
US economy. The New England business leaders came together and realized that if
the new small ventures and other small companies were supported to certain extent;
those companies would create new employment opportunities in the US and thereby
enrich the national economy. The capital required by new small firms was thought
to be facilitated by the venture capital firms. These thoughts led to the formation
of American Research & Development Corporation (ARD), the first venture capital
firm in the US. ARD's founders ensured that large amount of societal savings,
which were distributed across the economy be pooled at a single place and reinvested
in the US for a better future. ARD, the non-family promoted venture firm set the
goals of nurturing the new and existing firms, in upgrading their technology,
commercialization of technology, reviving the New England economy and successfully
emerging as a venture capital institution.
After
the First World War, the number of industries in New England reduced drastically.
The number of employees employed in cotton manufacturing units at Massachusetts
reduced from 124,000 in 1919 to 71,000 in 1929. Most of the employees shifted
to adjacent Midwestern states, where automobiles, radio, and other consumer durable
units were being developed. Further with the market crash in 1929, the US economy
and economic institutions suffered a breach of trust. Soon the distrust was reflected
in numbers, as the number of people employed in manufacturing units came down
by 13.5% and the number of manufacturing establishments reduced by almost 11%.
The manufacturing trend shifted towards larger organizations, which led to larger
financial institutions following the same trend. This resulted in decline in the
number of small financial institutions, which mainly dealt in providing long-term
loans to small manufacturing firms. Amidst such turmoil, it was observed that
investment trusts attracted large amount of funds, which was further invested
in risk-free projects leaving behind very small amount of fund for the new risk-borne
projects. Even the political fraternity admitted the fact that small firms were
exploited due to technology-savvy large firms resulting in large scale of unemployment,
and government support was needed for reviving the number of small firms. |
