A Wall Street Journal story late Wednesday says Google Inc. [GOOG] may join other tech and media companies in launching a corporate venture capital operation. More on this on Dealscape, TheDeal.com and soon, on Tech Confidential.
If Google proceeds, it will be interesting to see what model it uses as it wrestles with the tensions inherent to corporate venturing. At one end of the spectrum is the approach favored by IBM Corp., [IBM] which invests only rarely and instead works with VCs to try and get the companies they back to work within IBM's technological orbit. At the other end is Intel Capital, which has made very large investments in developing technologies (WiMax, for example) it wants to succeed.
The Journal piece doesn't go too deeply into the field, but as we explored in a big 2005 report that holds up pretty well, corporate venturing goes well beyond the infotech and media worlds, into chemicals, autos, pharma, biotech, consumer electronics and even retail. Best Buy Co. [BBY] has done some venture investing. Johnson & Johnson Development Co. is among the oldest of corporate venture operations, dating back to 1973.
The board of directors of the Strategic Venture Association includes executives from Panasonic Venture Group and Sony Electronics [SNE]. The NVCA's corporate venture group advisory board has members from United Parcel Service Inc. [UPS], Visa International [V] and ChevronTexaco Corp. [CVX].
As the Journal notes, in pure dollar terms corporate venturing has receded recently (and considerably since 2000, when some corporate venturers were giddy over the easy but fleeting gains of the tech bubble and strayed from the strategic rationale that led them to try to work with VCs in the first place).
What hasn't receded is the desire to get a window -- and maybe some influence -- on developing technologies and business models that may disrupt a wide span of industries. - Kenneth Klee
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