Over at BusinessWeek is a very interesting article about Google becoming the new VC [Venture Capitalist] of Silicon Valley. Google is investing in startup companies and hoping if they are successful, to be first in line to buy the new companies. Also Google is funding what are called ‘Gadget Ventures’ that compliment online tools that Google uses. The article also states:
Beating VCs to the Punch
By staking startups, Google hopes to avoid paying the higher prices companies can fetch once they take funding from traditional VCs. It’s possible that some of its investments are conditioned on Google having first-acquisition rights should a target opt to sell, some VCs speculate. Google didn’t respond to calls requesting comment. Making investments in startups also can help Google use more of its $4.5 billion in cash to cultivate tools that complement existing products. Google recently started a program called Gadget Ventures to fund entrepreneurs who build online tools using Google’s technology.
Also the article stated:
A partner at another large VC firm says a tendency by corporate venture arms to buy startups not long after investing in them is “very inconsistent with the venture community’s strategy” of providing guidance and making several rounds of investments over the long haul.
Google is inconsistent with the venture community’s strategy? I’m glad they are. If it wasn’t for Google being inconsistent we all would still be looking all over the Internet for stuff we need to find. Maybe Google can teach the VC’s some new tricks as well.
Full article here.
[tags]google, vc, companies, investments, startups, [/tags]