Google ventures into start-up market

Search giant launches $100 million VC fund to invest in early-stage start-up firms

2 April 2009 11:17

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Google has announced that it is launching a $100 million venture capital fund to invest in early-stage start-up firms.

Google Ventures will initially focus on the consumer internet, software, clean tech, bio tech and healthcare markets.

While the fund will be wholly owned by Google, it will operate as a separate entity with investments not necessarily matching the parent company’s strategic vision.

Rich Miner and Bill Maris are the fund's two managing partners.

Miner, who co-founded the Android smart phone software that Google acquired in 2005, said: "Just as we were founded by entrepreneurs, we think we can help some of those next entrepreneurs with the next great idea."

Google did not confirm how much it plans to commit to the venture although the Wall Street Journal reported that it could be around $100m (£70m) over the next 12 months.

"We invest anywhere from seed to mezzanine stage and embrace the challenge of helping young companies grow from the garage to global relevance," the partners said in a statement.

"Our team includes entrepreneurs, investors and innovators, along with some 20,000+ exceptional Googlers whose breadth of knowledge, experience and creativity constitute perhaps our own most valuable resource.

"You don't have to be a potential Google acquisition for us to want to work with you.”

UK venture capitalists have welcomed the news and will be hoping that the fund will invest in European companies and not solely focus on the US.

Richard Anton, a partner at Amadeus told the BBC: "It is a very smart move from Google. I hope that it will not just focus on US firms because it is in Europe that the greater shortfall is."

While early and seed rounds of VC funding in Europe are still relatively healthy, firms are struggling to find third-party investors as they expand their businesses.

In February, a survey by Populus of 80 members of the British Private Equity and Venture Capital Association found that a third of UK venture capital groups expect to write off at least three investments this year due to lack of follow-on funding, and over 80% said portfolio companies still in product development stage would survive less than a year on cash reserves.