In a surprise move and first of its kind in the word, Google inc has invested in two early stage venture funds namely Seed Fund and Erasmic Venture Fund.
In a news published in ET, Samir Sood, head (corporate development – South Asia), Google. India said “While the rush of large amounts of venture capital into India is well-documented, very little of this trickles down to small firms – the early-stage startups. Our effort is to build this gap by investing in these funds”
Incidentally Google was earlier in the talent market looking for a senior person in corporate development (M&A) who could identify upcoming opportunity in internet space but now seems to have decided to take LP (limited partners: Investors in a venture fund are known as limited partners as they have limited liability and are not involved with the day-to-day operations of the fund) route by investing in two early stage venture funds.
Incidentally both venture funds seems to be focused on Search engine Optimization / marketing (SEO/ SEM) and pay per click industry, the main/sole revenue driver for Google. Seed Fund promoter Mahesh Murthy runs a search engine optimization and PPC company “Pinstorm “ while Erasmic Venture fund has made only two investments out of which Position2 is a again focused on SE / SEM / PPC markets.
Google which has revolutionized search market and has left its peers far behind in Search and email services and created a revenue history but seems to be lagging behind in other areas of internet. Its shopping comparison site froogle seems to be there without any significant impact and is yet to make a mark in top three slot in US, while its video venture seems to be far behind Youtube, and Google tried to capture booming consumer video market by acquiring Youtube, though so far this acquisition seems to be creating more legal waves than revenue waves.
Hence it looks like by going LP route in India, Google want to keep a tab on upcoming disruptive technologies as well as find companies so that it can understand latest SEO / SEM techniques better in order to improve upon user experience which seems to be distorted by SEO / SEM companies.
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