Beginning with the founding of Arthur D. Little, Inc. in Cambridge in 1886, MIT alumni, faculty, and students have played key roles in launching thousands of companies worldwide, ranging from small, specialized high-tech operations to corporate giants such as Genentech, Gillette, Hewlett-Packard, Teradyne, and Raytheon. Many of these companies have formed the cornerstone of new industries, including biotechnology, streamlined digital technologies, local computer networks, defense, semi-conductors, minicomputers, advanced computers, and venture capital. MIT scientists and entrepreneurs laid the groundwork for much of the current biotech industry - and biomedical advances have continued with MIT-originated developments such as the first effective new treatment for brain cancer in a generation. The MIT Technology Licensing Office (TLO) has more than 1,000 issued US patents in its portfolio, many with foreign counterparts. Each year, the TLO annually grants as many as 60-80 licensing agreements.
The unmatched record of achievement of MIT-educated entrepreneurs is described in a recent study, "Entrepreneurial Impact: The Role of MIT". It estimates that 25,600 companies founded or co-founded by living MIT alumni were still in existence in 2006, employing 3.3 million people worldwide and generating revenues of close to $2 trillion. That would make the ensemble of MIT-alumni companies the equivalent in GDP of the 11th largest economy in the world. And MIT's impact extends far beyond the borders of Massachusetts, which headquarters MIT-alumni companies that employ about one million women and men. The report estimates that California firms started by MIT alumni employ over 500 thousand people, and twenty states have over 10,000 people employed by MIT entrepreneurs. This impact is global as well, with half of the foreign-student MIT-alumni entrepreneurs likely to return to their home countries.
In the 1940s, MIT President Karl Taylor Compton, working with members of the local business community, conceived the idea of a high-tech venture capital firm to help nurture the development of companies springing up in the region. This work led to the founding of the first modern venture capital company, American Research and Development (ARD), in 1946.