{mosimage} Google Adventures Onto Corporate Venture Capital Funding Bandwagon
San Francisco – Search engine giant Google is hoping to establish its own venture capital investment arm — another signal of resurgence into VC funding from corporations, and has hired William Maris, a 33-year-old former entrepreneur, to help coordinate the venture fund, according to a report in The Wall Street Journal, citing several people briefed on the discussions.The trend is already evident throughout many sectors, including technology. There are challenges that are strange to corporate venture capital investment, however, and Google would not be immune from them.
According to a report in The Wall Street Journal, David Drummond, the Internet search leader’s senior vice president of corporate development and chief legal officer, would lead the new investment business venture.
A Google spokesman confirmed that Maris has been hired but declined to comment further.
Google “does not comment on market chitchat or speculation” company spokesperson Andrew Pederson said in an e-mail response to a request for comment by E-Commerce Times.
Google is the newest in a long line of big companies across several sectors to create a venture capital arm. Chipmaker Intel, pharmaceutical giant Johnson & Johnson and the Dow Chemical Company all have units dedicated to making early stage investments in startups.
It is not the first time that Google has talked about launching such a venture as it looks to offer its expertise, money, reach and distribution to start-up firms.
Other companies like Walt Disney and Amazon have less formal investment operations, but have each invested in start-ups. Microsoft is another. It was an early investor in Facebook among others.
The Journal did not mention how much Google was investing to the fund or the types of investments it plans to make, noting that the plans could still fall apart. But with a cash pile of $12.7 billion, Google could become a major player in the corporate VC ranks.
Not every tech company pursues innovation through a venture arm, with Microsoft choosing to partner with or acquire startups outright. Amazon.com also does not have a formal fund, though the online retailer has been putting plenty of cash to work in the startup arena on a corporate level and through a personal fund of founder Jeff Bezos.
“The hope is that by investing seed capital in these businesses investors will reap major rewards as companies float or are acquired.”
The move indicates a change in strategy by Google, which has in the past preferred to buy companies outright rather than sit on board as an investor. It has snapped up dozens of businesses including micro-blogging firm Jaiku; social network service Zingku; aerial photography firm Image America; voice over internet protocol operations GrandCentral; and web feed FeedBurner among others.
Nevertheless, Google’s most active venture-style investments appear to come from Google.org, the company’s philanthropic arm. The organization has invested more than $85 million in various projects. Whereas some of them are non-profits or academic institutions, others like eSolar, BrightSource Energy and Aptera Motors, are technology start-ups.
A source familiar with the company’s thin-tank told Reuters that any decision to move ahead with a venture capital unit was in very preliminary stages and that no firm decisions had been taken.
According to a 2005 posting on Global Envision, a humanitarian aid site, Maris worked as a partner with Anne Wojcicki in a health investment fund called Catalytic Health. Last year Wojcicki married Google co-founder Sergey Brin.
Google also has invested in wireless communications companies like Meraki and FON, and in Current Communications, which offers Internet access via power lines. Its’ most notorious investment was in 23andMe, a biotechnology start-up that offers genetic testing to consumers and was founded by Wojcicki. Google invested $3.9 million in 23andMe last year.
However, Google’s admission could stir the market a bit since it has cachet among some entrepreneurs. But VentureBeat notes that other entrepreneurs — especially those working on search, e-mail, advertising and other areas core to Google — may be hesitant to share detailed information about their technologies with the search giant.