Earlier this week, Google finally announced the formation of a new venture arm called Google Ventures. It is where all smaller-scale venture investments from Google will now originate. The day of the announcement, I chatted on the phone with Bill Maris and Rich Miner, the two Google executives who are managing the fund to get a sense of what they are interested in and how the fund will work.
It turns out they are open to investing in pretty much anything from the Internet and cloud computing to healthcare and mobile. “We don’t want to artificially limit ourselves,” says Miner. What about space elevators? “Show me one that works,” retorts Maris, “and I will invest in it.” The two of them will run the entire fund pretty much by themselves, bringing in other Googlers as needed for expertise and to help evaluate startups. Both Maris and Miner have done venture investing before: Maris for Swedish holding company AB and Miner for Orange Ventures. Miner will be leaving the Android team at Google, where he negotiated many of the deal with carriers and handset manufacturers.
A couple weeks ago, I argued that setting up a venture arm is a bad idea because there are better ways for Google to be deploying its capital. Maris pointed out the relatively small amount of capital involved ($100 million) and responded: “Google has always had a strong belief in the power of entrepreneurs to do amazing things. Google has always made investments in companies, and we will continue to do that.”
My big concern, however, was that Google would invest for strategic reasons instead of purely economic ones. Both Maris and Miner assured me that this would not be the case. “It is true that strategics have had mixed results,,” acknowledges Miner, “but we think we can put this money to work. Startups end up doing one thing and then have to shift direction. If you take money from someone who wanted to see you do X because you said you would do X in that first Powerpoint, they may restrict your movement as you need to adapt.” Miner says Google Ventures will avoid that pitfall.
If you are an entrepreneur trying to figure out how to navigate your way to a pitch session with them, below is a cheat sheet with the basics you should know.
- A $100 million fund (that is the amount of capital allocated over the next 12 months). “We don’t have to invest $100 million this year,” notes Maris, “it is what we want to do.”
- It will focus on seed and early stage startups across any industry, but “won’t invest in a company that we don’t think we can properly vet and understand,” says Miner.
- The first two portfolio investments are Pixazza (”AdSense for images”) and Silver Spring Networks (smart grid technology).
- The sole limited partner is Google
- All venture investing from the company will now be done through Google Ventures (for instance, Google.org will no longer be making venture investments)
- Larger strategic investments in the range of hundreds of millions or billions of dollars will still be done by Google’s corporate development team led by David Lawee
- One-way mirror policy to protect startups from prying eyes. “We can look into Google, but Google can’t look into the companies without asking,” promises Miner.
- Overriding investment criteria will be ROI, not strategic motivations.
- But that doesn’t mean strategic considerations will be ignored either. “If a company comes in the door and it looks like something important for Google to acquire,” says Maris, “we will defer to Google’s corporate development department to take a look.”
So where does that leave startups and can they really trust that one-way mirror? Any startup related to the consumer Internet, search, or advertising would be well advised to be wary about revealing too much of themselves to Google Ventures. “This is a self-limiting process,” admits Maris. “We are not going to know the group of people who do not want to talk to us.” I’m sure they will have plenty of people knocking on their door regardless.
“Show me one that works,” retorts Maris, “and I will invest in it.”
any darn fool can invest after “it works”
Didn’t understood what you said..
He means, if it is obvious that it will work, anyone who has money would invest. I guess.
Okay if it like this then it’s fine..
Go back to sleep
Why are you here then?
I am sure they have a lot of top secret methods of tracking the progress of something far beyond your usual VC investor… they are the web
Jon
+1
I like how he used the word “I” rather than “we”. Wonder if he really believes that the $100M is his money?
Does anyone think google might help out the companies they fund in the search rankings?
Thats the big thing I dont like about this because I feel google can influence so much in the online world to tilt things towards their investments.
Yet Google has not helped Plurk, Orkut, and their own social network efforts.
Bullshit.
And loose all the credibility it has built over the years.
they were certainly not shy about pumping traffic to youtube after the acquisition.
they have already begin to ‘lose’ credibility steadily
*began
Google Ventures is a strategic project by Google. So much is happening in IT arena today that it has become difficult for big giants to keep pace with new ideas, Venture funding helps all the stakeholders the funded and the funding. Google don’t want to let any new ideas wriggle out of its radar that’s probable reason which has given birth to the Google the VC.
What? Twitter is running for Google Ventures? What?
Google is after twitter. And google established Google Ventures.
this from Maris’ Google Bio:
“Bill’s background also includes scientific research into cholinergic visual pathways, cell membrane patch clamping techniques and in-vivo neuronal cell injection at Duke University Medical Center, Department of Neurobiology.”
clap clap. God I hate Google.
thanks for the heads up. there is big potential in the niche location based social channel offering market. if they are as serious as they claim i’m sure we’ll be speaking.
StrategyLocator.com – know where your going
what in the heck is a “niche location based social channel offering market”
There are 30 people in this market…he will capture them all…
I think it’s a buzzword-filled way of saying “facebook clone”…
DG: pioneer of vertical locator cluster technology.
http://www.kill...locator-network
Shame: every person and business that speaks english can benefit from my system once fully executed.
E: dont just possess an idea. the landscape speaks for itself.
listen to what others are saying about the future of the internet?
watch the Tim Lee Berners Video http://www.yout...h?v=OM6XIICm_qo
over and over. the future is about improving how data is put together, how it communicates and positioned. Location………its important.
OneLocator.com – all alone
“know where your going”? What? Know where my what is going?
Know how to write in english would be a more appropriate tag line…
GrammarLocator.com!
Ah. So the ball is in their court then. If they don’t invest in your idea, then they’re the idiots.
Try dropping the incredibly idiotic sounding buzzword collection you have memorised to dole out every chance you get – “niche location based social channel offering market” doesn’t mean a fuckwad’s worth of anything.
Although other corps have done this before, I think their timing is perfect with other funding sources (VCs and angles) slowing their investments and/or trying to keep their current portfolio companies going. It should be interesting to see the types of industries they invest in such a life sciences, energy, solar powered jet packs (monetized with ad billboards affixed on the back), etc.
Is anyone else concerned about pitching venture ideas to Google? Seems like an easy way to tap straight into the ideas of innovative startups early. They could easily decline the venture and build the same stuff in-house.
Any venture capital firm has the resources to steal ideas pitched to them. Luckily, any VC firm that goes stealing all the good ideas pitched to it will stop getting people pitching good ideas to it.
yes they can do it, but they don’t have the expertise in it. Google on the other hand has plenty of that
Very surprised at the generally negative tone of the comments here.
Despite the fact that Google Ventures may be a bad idea for Google (as Mike said in an earlier post) I don’t think it’s bad news for entrepreneurs. The current economic situation making investments of any sort harder to come by, I think that this new Google service can have 2 positive effects:
1. More money in the investment ecosystem to be invested.
2. The added competition, especially from such a big player, might push other VCs to be more willing to invest not to miss out on opportunities or simply handing them over to Google when they could *sell* to Google later!
All the “evil” stuff everyone’s been pointing out – true or not – is not going to start happening now. Google has been investing in many companies anyway so they’ve had plenty of opportunity to be naughty.
quite the contrary. it is great for google. but lousy for enterpreneurs. there is no shortage of capital. there is a shortage of good investments.
G at the card table with there chip fund puts intense pressure on the entire market. we are entering an innovation integration era where nobody in print, tv, digital, mobile cannot afford to let anything slip. there are only a hand full (maybe 5) game changers out there.
SpotLocator.com – place your bets
Being Swedish and all I just noted a little typo in the beginning of the article where it says Maris used to work for AB. AB is aktiebolag, which means it’s a (not sure how to say it, but) “stock company”. He was working for Investor (AB).
Sorry for being a smart ass.
Great comment. I generally agree with what was written. I’m sure some entrepreneurs would jump at the opportunity to work with google. After all, it’s almost a guaranteed exit if they do reasonably well. That said, it I’d have to wait to see how well Google Ventures will do.
Investing for strategic reasons is different from investing for financial reasons. From a strategic perspective, Google Ventures may not be a bad idea. Rather than acquiring startups for hundreds of millions of dollars from other VCs, Google could get in earlier and cheaper and discover cool technologies that could be complimentary to its core business.
I believe Maris and Miner when they say they intend to invest for economic reasons. But what about venture arms of other large corporations? I’m sure most start out saying they are investing for strategic reasons. Otherwise, it would be an expensive gamble. It would make more sense to invest more money in R&D. Traditionally, VCs started by large companies have not done very well (at least from what I’ve heard anecdotally). I think Google should keep its core focus and leave the venture investing to guys on Sand Hill Rd. Alternatively, they could co-invest with some of the top venture firms. That might actually work better.
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was a video really needed to say that lol?
prob not lol
I’m confused. Why would Google Ventures “take over” Twitter? Why do you “hope” they would?
“So where does that leave startups and can they really trust that one-way mirror?”
Get real. If Google wanted to clone and superset they could do it without ever looking EVER.
Just mentioning this is pure retardation.
I am going to drop them a pdf presentation at I/O.
I don’t care if they invest.
http://picasawe...et.com/Servers#
I already have the equipment for the first cluster, the investment cash to buy another one in NY, and I have people @ work helping me as well as out of work.
This new project directly conflicts with Google’s adwords, I am proud to say. This will mess with Google worse than Cuil ever could, and it will be real as in concrete.
I would prefer that Google invest of course, which is why I am going to give them a USB key with the information about the project at I/O.
This is what’s going to happen with Google Ventures:
They will get hammered with 1000 proposals a day.
After 2 weeks, these guys will get exhausted walking through the mud every day.
They will hire in some entry level Googlers to “screen” the entries.
These guys will then revert to only accepting “recommended” leads from people like Mike Arrignton, blogs like TC and others, and the closed club of the silicon valley VC “in crowd” will continue.
Any start-up would love to have Google as an investor, but do the really good ones want to fight over the hill of muck needed to just get properly ignored out of pitch saturation by Maris and Miner?
fat chance. google wouildn’t even let arrington ride on the google jet
this is one sorry excuse for a cheat sheet if i’ve ever seen one.
think of doing “tips & tricks” next time
I am curious how many startups they plan to use with 100 Mil.
something like ycombinators at 20K a piece or something like 2 millions a piece.
.
before reveal your most valuable ideas to Google, just read this article about the “”"Google”"” Lunar X Prize…
http://www.ghos...8moonprize.html
.
Thanks God! This is what i really expecting from Google. I’ve an idea, and i’m definitely going to drop an email to them.
Google never stops at anything
This could be a very powerful concept for Google.
I should really start thinking about something to pitch up to Google and see how they respond to it.
I have some friendly advice for everyone writing on this forum thinking about submitting to GV. If you have not done your research and have not filed for a patent on the product you’re thinking about submitting, then you should not, for any reason, submit your idea to any venture funding company. Any company, (especially Google) has the right to claim and protect your idea for themselves. Be smart about what you submit to anyone. Good Luck….