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Last updated: July 10, 2014 4:52 pm
Google is creating a European arm to its venture capital vehicle, as the internet group seeks to tap into the ideas and money being generated by the continent’s emerging start-ups.
Google Ventures, which has previously focused its investments on Silicon Valley groups such as Uber and Nest, is launching a $100m fund dedicated to fledgling European businesses.
The move adds to the capital that has started to flood into the European tech scene. In June, Index Ventures launched a €400m fund dedicated to early-stage technology companies in Europe. In 2013, the London offices of Silicon Valley group Accel Partners unveiled a similar fund worth $475m. Google Ventures said the initial investment of $100m could rise over time depending on its success.
Many of California’s venture capital funds have sought to expand their portfolios by looking across the Atlantic, even if they do not have a formal office in Europe. Sequoia Capital, which has invested in Google, Yahoo and PayPal, has made a number of European investments in the past two years. They include Songkick, the British concert listings start up; Klarna, the Swedish payments company; and Skyscanner, the Edinburgh-based travel search engine.
Google’s move stems from a belief that the region will become home to some of the world’s biggest technology companies. It will give further credence to the idea that Europe can sustain technology hubs in places such as London, Berlin and Stockholm.
“As we look out around the world, we realise that the tech ecosystems are getting bigger and stronger,” said David Drummond, Google’s senior vice-president of corporate development.
“Nowhere is this more true than in Europe. Every European capital I travel to I see these start-up clusters. It’s obvious that great companies will come out of these ecosystems.”
The new unit will have four general partners. They include Eze Vidra, a longstanding executive who set up Google’s “Campus” in London, a workspace for budding tech entrepreneurs; Tom Hulme, a serial entrepreneur; Peter Read, a British angel investor and adviser to technology companies; and Avid Larizadeh, the head of the UK arm of code.org and co-founder of Bottica.com. MG Siegler, the American tech blogger turned venture capitalist, will temporarily relocate to London to act as the liaison between the new fund and Google headquarters.
They will work from offices in Clerkenwell in London, near the so-called Silicon Roundabout area that is home to hundreds of fledgling tech groups. The new fund’s investments will be made throughout Europe, however.
London has railed against the raft of recent regulations from the EU and the UK government as it fights to maintain its reputation as a global centre for finance and investment
This team will report to Bill Maris, head of Google Ventures. He said it was not clear what size, number or type of investments the fund would make in the region. “If you look at the US, we invest at all stages and in all sectors,” Mr Maris said. “It’s not about how many investments we do, but the impact those companies have.”
Start-ups could be attracted by the opportunity to establish ties with Google, as it may pave the way to a lucrative acquisition by the internet giant. In January, Google acquired Nest, the maker of smart thermostats and smoke alarms, for $3.2bn. Google Ventures had invested in the company in 2011.
The company insisted its investments were not “strategic”, however, saying its only goal was to achieve financial returns. It pointed out that some of its portfolio companies had also been sold to rivals such as Facebook and Yahoo.
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