Live From the Google (Ventures) Plex

Google Ventures came out of semi-stealth mode this week, revealing its entire investment team for the first time. It also today hosted a roundtable for journalists, from which I kept sending Dan email and text message reports. He assembled them below (thanks, Dan).

– Google CEO Eric Schmidt says Google Ventures is an effort to diversify the company’s asset base, but that it is not looking to invest in companies for the purpose of future acquisition. He adds that the plan is to partner with other VC firms more than to compete with them.

– Schmidt: “Venture capital is a hits business… we aim to do better than average… This is an example of Google taking a long-term view.”

-David Krane (partner) on how Google Ventures differs from its VC peers: its 20,000 employees. “The minute we start parachuting experts in, startups start to understand how we’re different.” Krane mentions Pixazza as an example, saying that Google Ventures provided them with access to Braden Kowitz, who helped lead design for Google Buzz, Gmail, Google Apps for Business, etc. He helped Pixazza rejigger its interfaces to heighten response times to its designs on the Web and has apparently done similar work — analytics, dashboards — across 50 percent of Google Ventures’ current 10-company portfolio.

– Bill Maris (managing partner): “I wouldn’t rule out any sector… We’re excited by areas like bioinformatics, regenerative medicine and online monetization,” among other things. Focus is on North America, though it sounds like the group may begin investing internationally as soon as next year. If it makes that shift, it will open offices abroad. The group wants to be close to the companies it backs. (Indeed, in addition to Mountain View, Google Ventures has a Boston office.)

– Schmidt: “I hope dollars are lowest value” thing. Experience (is top thing).

– Newest investment is mobile payments platform company Corduro.

– Buying around one company per month.

-Maris on why it makes sense for Google to be investing in regenerative medicine: “When you think of the amount of data and numbrs you have to crunch, there are Google resources that can be deployed as well… Consider proteomics. If you could design a protein on a computer…in 3D… that would be huge step forward, and we have a computing asset that most startups don’t have aceess to.”

-Schmidt adds: “We have lots of people who we can help in some modest way, including with computational requirments, and how do I operate on a global level — we have a lot of experience with these things.”

– Schmidt: “I haven’t been involved in any decisions [by Google ventures]… My job is to set the budget.”

– That budget is around $100 million per year. Ten investments made in first year, but expect that pace to increase now that team is filled out. That’s a discrete fund, by the way, it’s not coming off any balance sheet. And Google is the sole LP. Next year, the fund could be bigger (or smaller). There is no cap on how much money the group can throw at one company (well, as long as they don’t exceed more than the overall budget allows).

– Maris gets asked if VC is healthy. He says that some venture models are healthy and having success while others aren’t, but he “can’t comment” on the macro-level. He does say that the market seems active.

– Maris says that several inbound deals arrive each day, and that ones referred by Googlers receive priority (around 25% of deal-flow comes from inside, but no current portfolio cos. have been founded by ex-Google employees). Adds that firm has funded several angel deals, but that Google Ventures is not trying to compete with YCombinator, DogPatch Labs or TechStars.

– “Progressive” compensation structure at Google Ventures. Anyone who refers what turns out to be a killer deal to the company is going to get paid. Says Maris, “We wouldn’t just cash the check.”  Managing directors are also paid like traditional VCs, suggest both Maris and Krane. No sense reinventing the wheel in this regard.

– Maris: “We have a pretty broad view of what a VC is,” he says, including subject experts (without investing experience). “Everyone we’ve hired so far is from Google.”

– They have not yet passed on any follow-on rounds.

– An aside, Google’s M&A group is apparently buying one company a month.

– Another aside: I’m not sure the journalists were sorry to see Schmidt leave the room 40 minutes into the meeting. We were glad he was there — then less so after he told us the second time what the difference is between venture capital and private equity. (It sometimes felt like Schmidt had mistaken us for students at Stanford, where he co-teaches a class about venture capital.)

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