Report: Google developing VC arm

Google is revisiting efforts to create a venture capital arm, according to a report on The Wall Street Journal site Wednesday night.

David Drummond, a Google senior vice president, is expected to lead the effort, according to those who were briefed on the discussions. The group has also hired William Maris, a 33-year-old who has worked as an investor and entrepreneur, to help set up the venture, the newspaper reported.

The search engine has played with the idea of a venture capital arm in the past, and the plans could still fall through.

If successful, the new venture would put Google--a company better known for buying companies than investing in them--in the more-formal role of helping get start-ups off the ground. Other Silicon Valley companies with extensive VC track records include Intel, Hewlett-Packard, and Motorola.

The move comes at a tough time for overall venture capital investing. A report from Dow Jones VentureSource earlier this month stated that VC investments dropped 12 percent 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 have 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 percent to $1.6 billion in the second quarter. Meanwhile, later-stage deals grew by 14 percent 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.

[whachau]

Not a good sign. Is Google running out of ideas and creativities ? When they start investing on real estate or stock market of VC activities, you know they are just another Yahoo.

[Manhattan2]

If Google is ready to be creative and make a difference have them look into the work being done by the Manhattan 2 Project at privately held Sensible Ventures.

[danielszabo1981]

it never hurts to invest in companies potential startups that stand a chance to return a solid percentage of their profits to your pocketbook.

my 4 years of business school spider-sense it tingling...something amiss...i think this is google injecting google-culture into other branches of the economy. Someone else can take it from there...