02 April 2009

Google to invest in venture capitalism

The online giant has established a Venture Capitalist arm - Google Venture - dedicated to seeking out emerging business excellence in a number of fields. Google Venture will look to finance businesses from start-up to intermediate level in information technology, Internet products, biotech and health care.

Google's announcement appeared to be welcomed immediately, netting them a healthy 2.2 per cent rise in Google shares on Tuesday, to £350.29, according to Reuters.

The new venture is to be headed by managing partners Rich Minter and Bill Maris, both from strong science and technology backgrounds. Minter has a Ph.D. in computer science and came to Google in 2005 via the company's acquisition of Android. Maris, on the other hand, has a BA in neuroscience, and a background in biotechnology and entrepreneurship. Together, the two guiding lights of Google Venture seem a perfect fit for the organisation's new project.

The project itself couldn't, it may seem, have come at a worse - or better - time. The BBC reports that: "according to the US National Venture Capitalist Association, investments stateside have dropped 71 per cent since 2007", Richard Anton - a partner in UK-based investment fund Amadeus Capital - welcomed the move.

He told the BBC: "It is a very smart move from Google", and Google themselves, seem to agree. Miner and Maris in their official blog, admitted: "Economically, times are tough, but great ideas come when they will. If anything, we think the current downturn is an ideal time to invest in nascent companies that have the chance to be the 'next big thing' and we'll be working hard to find them."

Doubters have raised concerns over Google's intentions towards financing start-up businesses within the Internet goliath's back garden. Indeed, Google has increasingly had to answer to concerns over its growing monopoly, but insist Google Venture remains an altruistic endeavour, paying an all-too self-referential nod, in this statement on the Google Venture website: "We...embrace the challenge of helping young companies grow from the garage to global relevance."

Their message seems pretty clear - while we don't necessarily want controlling stakes in your start-ups, "we're looking for investments with the potential for significant return." They go on to state that "acquisition by Google of portfolio companies is possible, but this is not the goal or focus of our investment activities."

Richard Anton acknowledged the concern, but went on to denounce it, telling the BBC: "Entrepreneurism is the antithesis of monopoly. It is a case of a thousand flowers blooming. It is a good time to be investing and a good time to build companies."

That Google is at pains to point out its approach of no strings attached investment, one can't help but feel somewhat uneasy when they look to attract "the next big thing" - ultimately a potential competitor - with big talk about their own market dominance, answering an FAQ with: "we don't require our portfolio companies to work with Google in any special way, although we certainly think there is a lot to be gained by doing so."

Interested parties need simply email Google Ventures a 3-page proposal or presentation not more than 20-slides in length. Google looks forward to hearing from you.

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