Google is launching its own venture capital arm called Google Ventures. Among those involved in the venture are Rich Miner, who oversaw Google’s efforts to build the Android platform, David Drummond, Google’s chief legal officer, and investor Bill Maris, who will lead the fund.

But is Google launching a venture fund a… bad idea?

TechCrunch’s Erick Schonfeld reckons it IS a bad idea. He considers the history of corporate venture funds rather ‘grim’ owing to, among other things, corporations having goals other than the usual goal of a venture capital fund i.e. maximizing returns.

Erick Schonfeld indicates that Google should stick to its traditional strategy of acquiring startups it believes will offer Google a strategic advantage.

I think there’s merit in Google investing in promising startups that haven’t yet proven themselves, but may well offer strategic benefits long-term.

But when I think back to some of the corporate venture funding efforts I’ve been exposed to, I can only confirm that they really didn’t work. Largely because their corporate masters just didn’t know how to run a venture capital fund, or didn’t really want to run a venture capital fund, or both.

Then again, a lot of companies stuff up acquisitions too, and Google has done a pretty impressive job of acquiring businesses e.g. Blogger, Adsense, YouTube, etc and not just integrating them into its business, but expanding and improving them.

So if anyone can make a corporate venture fund work, maybe Google can…

Source: Erick Schonfeld, “Google Ventures Almost Ready To Launch, But It Is A Bad Idea,” TechCrunch, March 20, 2009

This entry was posted on Friday, March 27th, 2009 at 12:00 am and is filed under Feature, Venture Capital. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.