At a time when it’s easy for tech entrepreneurs to find money, the top venture capital (VC) firms need more than cash to stand out. So in a quest to become a top-tier VC firm, Google Ventures not only needs to be an agressive investor; it needs to be as visible as possible.
The rise of Google’s venture capital arm is an interesting one, because unlike a lot of emerging VC firms, Google Ventures isn’t lacking in capital. Instead, the firm has to prove that it’s not just an offshoot of Google, but rather a VC firm in its own right that can compete with other top-tier firms for access to the best — and potentially most profitable — founders.
“We are not your typical strategic corporate fund,” the firm’s enterprise partner Karim Faris told Forbes, in a mantra you hear often from the group.
One way Google Ventures is working to attract young founders is the addition of young, visible partners like former Digg founder Kevin Rose and blogger-turned-VC MG Siegler. While it boasts Android founder Rich Miner as a partner, Miner is based in Boston, and the addition of Rose and Siegler can help Google Ventures build up its local presence and visibility. So far, Google Ventures has invested in a large number of companies including Nest, DocuSign, HomeAway, and Nextdoor.
One way Google Ventures is trying to distinguish itself from its Valley peers is by preaching a more hands-on approach to investing. Unlike the traditional model, where partners dispense advice to portfolio companies at board meetings or when the companies ask for it, Google Ventures has set up more of a lab-like atmosphere in Mountain View. It has designers, marketers, engineers and other staff on hand to assist and advise the portfolio companies however they need it.
This strategy has worked for firms like Andreessen Horowitz, which also launched around the same time as Google Ventures in 2009 and was originally derided for its flashy, PR-powered operation. But it has quickly become a top-tier firm in a short period of time, investing in companies like Facebook, Instagram, Github, Pinterest, and Twitter.
In November, Google Ventures announced that it now plans to invest $300 million a year, compared to more typical VC firms that invest about $200 million to $500 million over the course of several years. There’s no question that having the resources and support of Google behind the firm has an impact.
“We were lucky. Larry and I, we just wrote up the check,” Google co-founder Sergey Brin told GigaOM in an interview at the time.
When Google Ventures announced plans to increase the size of its fund, managing partner Bill Maris said Page had asked him what he would do with $1 billion. But with the firm already investing in about 80 companies a year and providing resources like engineering, design, and marketing guidance, he worried more about how to scale that kind of operation and provide enough partner attention for the companies that need it. So adding some new partners is a step in that direction.
Building a VC firm that can compete at the highest levels with the likes of Sequoia and Greylock only four years after launch isn’t an easy task, even if the firm had one of the hottest names in technology as partners. But if Google’s forays into driverless cars and Glass are any indication, the company has no problem setting its sights high.