Shares in Care.com might have “soared 18% in extended trading,” in the hours after CapitalG (formerly known as Google Capital) made its first corporate venture capital investment in a public company but the relative euphoria died away quickly.
The stock was trading at effectively the same levels in mid-December even after the company’s third-quarter results to 24 September posted positive revenue growth of $17m for its first nine months of the year and a move into the black with profits of $1.45m in this period.
However, the euphoria over CapitalG, which is run separately to Alphabet’s other corporate venturing units, such as GV (formerly Google Ventures), has remained intact.
Laela Sturdy, partner at CapitalG, adding board membership at Care.com to her previous deals for learning platform Duolingo, jobs site Glassdoor and company payroll and benefits services provider Gusto (formerly ZenPayroll) over the past two years.
Armed with her MBA from Stanford University’s Graduate School of Business following an undergraduate degree from Harvard in biochemistry, Sturdy has brought these portfolio companies relatively sophisticated financing and strategic and operational tools from its parent, Alphabet and its search engine Google.
New York-listed home care provider Care.com raised $46.35m from CapitalG in June only to pay $30.5m of it out to one of its legacy shareholders, venture capital firm Matrix Partners, which had invested in 2006.
Care.com repurchased 3.7 million shares of its common stock from Matrix Partners at a price of $8.25 per share, representing a 5% discount to the 30-day volume-weighted average trading price ended 27June of $8.68.
Care.com had issued CapitalG convertible preferred stock, at an initial conversion price of $10.50 per share, representing a 21% premium to the 30-day volume-weighted average trading price ended 27 June of $8.68. Dividends on the preferred stock accrue at 5.5% annually during the first seven years from issuance and are payable in kind, which means the interest is rolled up and can be paid at the end of the term.
At the time of the deal, Sturdy said: “Google has been a customer of Care.com’s enterprise services for employees since 2011, so I have been able to see first-hand how Care.com’s innovative mobile platform and enterprise solution – Care@Work – helps families search for caregivers and get much needed back-up care services.
“CapitalG is excited to support Care.com in building on their market leadership by giving them access to our biggest asset – some of the world’s leading experts in a range of topics at Google and Alphabet – as they continue to deliver delightful and seamless solutions to consumers and enterprises.”
Founded in 2013, CapitalG pairs its companies with advisers spread across Alphabet, and in the previous six months has tapped 300 different people to give advice to its companies, Sturdy said to newswire Bloomberg at the time of the deal.
Before joining what is now CapitalG in October 2013, Sturdy had spent nearly seven years at search engine provider Google and its YouTube online video business. Initially in strategy, marketing and sales leadership, Sturdy was in 2008 made head of media and entertainment at Google’s display and video advertising business. In 2010 until joining CapitalG under David Lawee, she was head of emerging businesses to run new local and commerce businesses at Google, including Google Offers and Adwords Express.
Sturdy, therefore, knew most elements within Alphabet and has pulled people in to support the portfolio companies.
When jobs site Glassdoor, a rumored IPO candidate after raising another $40m in June in a round led by mutual fund manager T Rowe Price Associates, floats on a stock exchange it could thank Sturdy, a board observer at the company, for its international prospects. Robert Hohman, CEO of Glassdoor, said in the September 2015 issue of Fortune magazine that Sturdy had schooled Glassdoor on Google’s rule for interna¬tional growth, which states that every new feature should be shipped in as many languages as possible, even if it slows the pace of new releases. He said: “It is extremely convenient when you are facing a hard problem to be able to ask the question, ‘I wonder what Google did on this?’.”
Similarly, when Gusto planned to review its entire payments system which processes about $20bn per year, CapitalG asked the engineer who built the software architecture for all payments across Google to help.
Edward Kim, chief technology officer at Gusto, told news provider Recode in December 2015: “CapitalG really has carte blanche within Google to find that one person and have that one person solve our problems. They actually bring a lot more to the table other than money.”
And Google helps in other ways. Lawee used to run mergers and acquisitions for Google and acquired two businesses started by Luis von Ahn before he became CEO at Duolingo.
Duolingo raised $45m in June 2015 from a consortium including CapitalG and venture capital firms Union Square Ventures, New Enterprise Associates and Kleiner Perkins Caufield & Byers but has ties with Google as both investor and portfolio company are interested in machine learning.
At the time of the deal, Sturdy told news provider Forbes: “Duolingo’s mobile-first, adaptive, and gamified platform is changing the way people are learning languages across the world.”
It could be said that Sturdy is changing the way people are being funded.