Google to venture into start-ups

Google Ventures will seek out "great companies"

Google is searching for "the next big thing" in technology as it announces its latest effort, Google Ventures.

Its new venture capitalist arm pledged to help find and develop "exceptional start-ups", offering early stage investments to a range of new firms.

Areas it will look at include consumer internet, software, clean tech, bio tech and healthcare.

But it will also include "areas we haven't thought of yet," the partners of the new venture said.

Tough times

"This is Google's effort to take advantage of our resources to support innovation and encourage promising new technology companies... we think we can find young companies with truly awesome potential and encourage their development into successful businesses," said Rich Minter and Bill Maris, managing partners of Google Ventures in a blog post.

Google has not yet said how much money it plans to commit to the venture although the Wall Street Journal is reporting that it could be around $100m (£70m) over the next 12 months.

Google Ventures will include entrepreneurs and investors who will work alongside the existing Google team.

It is a good time to be investing and a good time to build companies Richard Anton, Amadeus

Venture capitalism has not been recession-proof. According to the US National Venture Capital Association, investments stateside have dropped 71% since 2007.

Google admitted that the timing of the venture may raise some eyebrows.

"Economically, times are tough, but great ideas come when they will. If anything, we think the current downturn is an ideal time to invest in nascent companies that have the chance to be the 'next big thing' and we'll be working hard to find them," it said in its blog post.

Room for all

UK venture capitalists have welcomed the arrival of Google on the market.

"It is a very smart move from Google. I hope that it will not just focus on US firms because it is in Europe that the greater shortfall is," said Richard Anton, a partner at UK-based venture capitalist Amadeus.

Before the recession, US venture capitalists were investing around $30bn (£21bn) per annum on start-ups compared to $5bn (£3.5bn) in Europe, according to Mr Anton.

While initial rounds of VC funding in Europe were still relatively healthy, firms were struggling to find third-party investors as they expanded their nascent businesses, he said.

Google has been increasingly accused of becoming too powerful but Mr Anton said he was not concerned that this would happen with its latest venture.

"Entrepreneurism is the antithesis of monopoly. It is a case of a thousands flowers blooming. It is a good time to be investing and a good time to build companies," he said.