Google contemplates separate venture capital arm

A number of technology giants like Intel and Motorola have set up their own venture capital arms to invest in new technologies and fund promising startups. Now Mountain View-based Google, which has already invested considerable sums in fields as diverse as solar energy to space exploration, may soon join this list, latest reports indicate. (See: Energy of the future - solar thermal power! and Google moves from cyber to outer space - signs up with NASA to build 40-acre R&D centre)

David Drummond, the internet search leader's senior vice president of corporate development and chief legal officer, would lead the investment business, the Wall Street Journal said yesterday. It also reported the hiring of former Web hosting entrepreneur William Maris to help set up the venture.

A Google spokesman confirmed that Maris has been hired but declined to comment further.

According to a 2005 posting on Global Envision, a humanitarian aid site, Maris worked as a partner with Anne Wojcicki in a health investment fund called Catalytic Health. Last year Wojcicki married Google co-founder Sergey Brin.

Maris created his own Web hosting company called Burlee.com, which is now part of Atlanta-based Web.com. He also made investments in technology companies for Sweden's wealthy Wallenberg family, according to the Global Envision site.

A separate investment arm is not a new idea for Google, but earlier plans fell through before anything concrete materialised. The venture is still in its formative stages and can still fall through, especially considering the recent tough times for overall venture capital investing.

A report from Dow Jones VentureSource earlier this month stated that VC investments dropped 12 per cent in the second quarter compared with the same period a year ago, with $6.64 billion put into 602 deals - the lowest quarterly deal count in three years.

More venture firms found themselves funneling money to support later-stage companies at the expense of companies seeking first-time funding. The amount of money sunk into start-ups seeking first-round funds dropped by 12 per cent to $1.6 billion in the second quarter.

Meanwhile, later-stage deals grew by 14 per cent to $3.1 billion because those companies in particular had fewer opportunities to go public. No venture-backed company went public in the second quarter.