Advice For Google's VC Arm: Don't Be Boring

Venture Capital

from the Another-Me-Too-VC dept

Last week, there was a lot of skepticism surrounding Google’s VC effort as observers pointed out all the pitfalls of corporate venture capital funds and the historic performance (or lack thereof) of other companies that have tried to do what “real VCs” do. And since Google is often painted as an unconventional company with its Google.org efforts for philanthropy, the search giant may also face some pressure to do something unconventional with its VC investments.

So what is a company with $12.7 billion in cash to do? Ignore its compulsion to do things differently and simply try to maximize its own investment profits… would be the boring answer. The more exciting answer would be to throw caution to the wind (as well as a lot of money) and try to become a VC with a bit less of a singular profit-taking mindset. It’s been noted that corporate VCs don’t have the same profit motivations anyway, so why try to mimic pure venture capitalists? Perhaps Google’s VC arm should try to offer more of a helping hand to its employees (who may be just counting the minutes until they’re ready to jump ship with their own business ideas) and try to preserve a startup culture inside Google. Doing so might foster innovation within Google’s campuses and shift the profit-making incentives more towards the existing innovators at Google — instead of the fund manager(s).

Google’s opportunity to do something different could have other possibilities as well. Google already sponsors the Lunar X Prize, and it could create its own series of challenges that might benefit Google’s existing businesses (similar to the Netflix Prize). Google’s giant pool of money could also be put towards small developer teams (a la Y Combinator) to create a “minor league” of future Google engineers. Basically, Google’s VC arm may want to create other metrics in addition to a monetary return on investment — so that its efforts are not judged solely on the performance of creating the next Google. That way, Google’s VC arm might develop stats like the number of Google employees hired via its VC efforts or the number of projects based on Google’s platform technologies.

In any case, the direction of Google’s VC arm could be a telling signal for Google’s maturity — and whether Google is settling down and becoming another corporate giant that will eventually put an end to the bean bag chairs, free M&M’s and child care or if it still has that under-30 spirit to try out different angles.

Filed Under: corporate venture capital, venture capital
Companies: google