Search engine provider Google’s latest corporate venturing fund has not wasted any time. Making its first investment before the unit was even announced, the artificial intelligence (AI) technology-focused Gradient Ventures launched in July with a plan to invest in 10 to 15 startups by the end of last year.
To achieve such an ambitious goal, the fund would need talented investors and so its managing partner, Anna Patterson, brought in Shabih Rizvi. “He is incredibly responsive, thoughtful and resourceful. He can create a syndicate in an evening and figure out stealth company competitors. We could not have started Gradient without him,” Patterson said.
Rizvi joined Gradient from venture capital firm Kleiner Perkins Caufield & Byers, (it was an investor in Google before its own initial public offering during the dot.com days so retains strong ties with its former portfolio company), where he spent three years investing in the likes of online phone directory TrueCaller, gamer-oriented livestreaming platform Mobcrush and payment services provider Veem. Prior to that he had a variety of roles at Google, including founding a startup outreach program for Google Play and working in the mobile apps lab team.
He joined Gradient prior to its official launch, in June, and is focused on investing in companies from seed stage to series B. It was the chance to help launch a fund from the start that appealed to him.
Rizvi said: “As Gradient Ventures was being formed I saw a unique opportunity to help a new venture fund get started. I was really intrigued by the team, focus on artificial intelligence and working at a company that has been successful at starting new investment funds.”
Gradient’s first investment was made in June when it led a $10.5m series A round for Algorithmia, the operator of an algorithm network for app developers. Since then it has added five further companies to its portfolio: image classification and anomaly detection software developer Cogniac, drone operation platform Cape, multi-sensor deep-learning awareness platform developer Aurima, augmented reality technology developer Ubiquity6 and coding automation technology startup PullRequest.
Rizvi is happy with the start that Gradient has made. He said: “As a new fund it is always unclear what the reception by the market, specifically entrepreneurs, will be.
“Our team has been very lucky in that our launch was well received and we are getting a chance to meet and work with some of the most exciting companies working on AI.”
Being a venturing arm for Google, part of the Alphabet holding company, provides some unique resources. The fund’s size has not been set yet, instead Gradient is investing directly from Google’s balance sheet and it has the flexibility to pursue follow-on investments when it wishes.
The fund also has an engineering rotational program in place with Google, pairing its top talent with Gradient’s portfolio companies. This has been key in helping Rizvi face one of the biggest challenges in launching a new fund.
“As has become increasingly true over the last several years entrepreneurs can turn to a lot of different sources for capital. It has been, and will continue to be, critical for us to help illuminate how we can help above and beyond capital,” he said.
Another challenge that Rizvi said corporate venture capital faced was a lack of transparency on whether units are strategic or independent funds.
“Over the past several years many CVC units have reoriented their historical strategies on investment,” he said. “Some continue to be purely strategic while others have become more like independent investment funds while others are a combination of fund plus fund of funds. While progress has been made the industry sometimes lacks clarity on where on the spectrum a given CVC unit may fit. It would be helpful if there was more granularity and transparency on this in the market.”
With Gradient going from strength to strength Rizvi is understandably optimistic about its and his future. “I love working with founders and hope my role continues to afford me the privilege to do so for a long time,” he said.