Google Ventures, the corporate venturing arm of technology and internet conglomerate Alphabet, will restructure itself as a global entity in January 2016, chief executive Bill Maris told the Financial Times yesterday.
The shift in approach will follow a rebranding of Google Ventures to GV this week and, Maris told the Wall Street Journal, the move away from investments at seed stage the unit has made this year.
Google Ventures was formed in 2009 and invested in early-stage companies alongside the other corporate venturing unit owned by Google, Google Capital. Both entities have been brought under the umbrella of Alphabet, the holding company formed earlier this year to oversee the overall activities of the conglomerate.
The unit launched a European branch in July 2014, opening a London office and allocating $125m for investments in the region. It has since made only six investments from the fund, in companies including travel service Secret Escapes, music licensing business Kobalt and marketing technology developer Yieldify.
However, from 2016 GV will drop the idea of separate funds in order to provide it with more flexibility with regard to where it invests, Maris told FT.
Google Ventures invested about 20% less in 2015 than in the previous year, and backed 39 companies according to its website, though the higher volume of deals we have tracked indicates it is probably referring to new portfolio companies.
Maris told FT: “The amount of money trying to get into investments has caused prices to go up and negotiating leverage to move to the entrepreneurs. Capital has never been a constraint for us.”
GV will have $2.4bn under management as it heads into 2016, with $800m – representing $300m of unspent capital from previous years and a $500m fund earmarked for next year – so far unallocated. The unit has already cut its seed-stage investments, sized at between $100,000 and $300,000.
Maris told the WSJ there was a group decision within Google Ventures to de-emphasise investments at seed stage due to the market being overheated, though individual partners had the opportunity to make seed investments should they so desire.
Maris added that the pressure building at IPO level is concerning, stating: “I am seeing actual companies that are, for reasons that are hard for me to understand, resisting to go public with all they have got.
“The IPO market has been, at least for us, relatively quiet…it has been a very choppy exit market this year.”
Figures released by Google Ventures show that for the second year in a row it has invested most heavily in life sciences, putting 31% of its funding into the area, ahead of consumer technology (24%), enterprise (23%), and data and artificial intelligence (13%).
Describing the unit’s life sciences strategy, Maris said: “I would not be surprised if we invest $200m to $250m over the next 12-24 months,” adding that $1bn would be a reasonable aim over the next five years.