The company was founded by Don Nichols in 1968 as Advanced Vehicle Systems; the cars were called Shadows, designed by Trevor Harris and entered under the Shadow Racing Inc. banner. The first Shadow, the Mk.I, was entered in the CanAm series with George Follmer and Vic Elford driving them. The Mk.1 featured an innovative design, using very small wheels for low drag and although the car was quick, it was not the most reliable car in the field

The team became more competitive the following year, replacing the Harris car with a Peter Bryant design owing some elements to his Ti22 'titanium car' with Jackie Oliver also arriving from this effort and finishing eighth in the CanAm championship. The team also found some financial backing in Universal Oil Products (UOP).

Shadow came to dominate the shortened 1974 series, although by this point they were competing largely against privateers, the works McLaren and Porsche efforts having left the series.