Google launching new fund for later-stage tech investments

Google is launching a new fund through which it will make later-stage investments in technology companies, a Google executive said Wednesday.

The fund, to be called Google Capital, will be announced this summer but has already made three investments to date, said Mike Pearson, a general partner at Google Capital, at the Red Herring 2013 conference in Monterey, California.

Google already operates a fund, called Google Ventures, through which it invests in startups working in areas like mobile computing, gaming, big data and life sciences. Google Ventures has funded more than 150 companies to date, including Nest and DocuSign.

While Google Ventures tends to make early-stage investments in companies, the new investment arm, Google Capital, will be aimed at the “growth equity side of the market,” Pearson said during a panel at the conference.

“There are a wealth of people out there doing amazing things and we should be able to leverage Google to empower them,” he said.

Pearson didn’t identify the companies Google Capital has invested in so far, but said the fund will invest in areas adjacent to Google’s business, including potentially Internet infrastructure and digital video.

The fund hasn’t been formally announced and a “coming out party” is planned for the summer, Pearson said. He didn’t disclose the initial size of the fund or provide any other details.

In November, Google Ventures announced it was increasing the size of its fund to $300 million per year. Venture funds tend to make smaller investments in companies, while capital funds can sometimes invest significantly larger amounts.

“Google Capital is a very smart move” for Google, according to Ivan Nikkhoo, managing director at Siemer & Associates, which provides capital raising and other financial advisory services to tech companies.

In some cases, other businesses have acquired the companies Google made early-stage investments in, he said. Google Capital could provide Google with a way to take more control over the companies Google Ventures invests in. “Google wants to make sure they’re there for the life cycle of the company,” Nikkhoo said. “They want to make sure they control the strategic assets along the way.”

The fund might focus on areas like mobile commerce, location-based services, or technologies for delivering more personalized content and search results, he said. Google is trying to provide more “contextualized” search results with services like Google Now.

One of Google Ventures’ current projects is the Glass Collective, for funding startups that are looking to build products for the Google Glass augmented reality system. Other investments have been made in RetailMeNot, TuneIn and Pocket.

Updated on 5/23/2013 to correct the size of the Google Ventures fund.

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