2016 Roundup: Alphabet

Alphabet, the internet and technology holding group that includes Google, had an interesting year with regard to its corporate venturing activities, which continued to diversify as early-stage investment unit GV lost its founding partner.

Bill Maris, the co-founder and CEO of GV, known as Google Ventures until late 2015, left in August having launched Google Ventures in 2009 and seen it grow into one of the most notable names in the venture capital space, investing around $500m a year.

Maris was not the only high-profile departure from the upper end of GV in 2016 – general partner Rich Miner had dropped down to a venture partner position the month before in order to focus on an education technology project for Alphabet. David Krane took over from Maris as head of GV and the unit barely broke stride, continuing to be an active investor throughout the year.

Maris was known as a very hands-on leader and was thought to be chiefly responsible for GV’s investments in the healthcare sector, but the unit made some notable deals in the space after he left, investing in a $95m series A round for Carrick Therapeutics and notable rounds for Arcus Biosciences and Genomics Medicine Ireland.

Carrick was in fact the largest deal in which GV was involved in 2016, though other notable rounds included 3D printing technology developer Carbon ($81m), audio-focused security company Pindrop ($80.8m), immuno-oncology company Forty Seven ($75m) and GIF depository Giphy ($72m).

The pick of GV’s exits over the year was big box retailer Walmart’s $3bn acquisition of e-commerce company Jet.com in August, 18 months after the unit had invested in the company at a $600m valuation. Genomics technology developer Editas Medicine went public at a $570m valuation while Urban Engines was acquired by sister company Google.

GV was rebranded near the end of 2015 and Alphabet’s growth equity unit, Google Capital, followed suit last month, renaming itself CapitalG and confirming it had invested in Snap, the instant messaging company formerly known as Snapchat, though the amount provided was not disclosed.

CapitalG quietly ramped up its investments in 2016, leading an $850m round for accommodation platform Airbnb at a $30bn valuation, as well as the $150m series D round closed by online payment technology provider Stripe at a $9bn valuation.

The unit also participated in a $400m round closed by online insurance provider Oscar Health that valued the company at $2.7bn. Including Snap, all four businesses have valuations substantially higher than any of CapitalG’s past portfolio companies, signifying it has begun investing later in a bid to differentiate itself from GV.

Google, which separated from the units as part of the 2015 reorganisation, meanwhile began making its own investments, backing the $793m round closed by augmented reality developer Magic Leap and the $80m raised by chipmaker Barefoot Networks over the course of the year.

Google has reportedly also been supplying convertible note financing for selected startups formed by ex-employees, and things may get more complex in 2017, with Alphabet reportedly in the process of setting up an internal incubator called Area 120 in a bid to retain talented team members.

Alphabet is notoriously secretive but reports that have emerged – notably a Bloomberg article two weeks ago – paint a picture of a huge and diverse organisation where division leaders are given the space to operate independently, meaning units and projects sometimes clash or overlap with each other in the process.

The firm’s corporate venturing activities appear to be no different (GV and CapitalG both invested in the Pindrop round for instance), but you have to wonder whether they will continue to diversify, or if at some point Alphabet will decide it makes more sense to consolidate activities into a more focused structure. If so, it does not appear to be happening any time soon.