Big Deal: Google Ventures’ M&A help

Google Ventures, the $300m-per-year corporate venturing unit of the eponymous US-listed search engine provider, says its “hands-on teams work with portfolio companies full-time on design, recruiting, 
marketing and engineering”.

But it seems to have a potentially fifth arrow in its quiver – helping its portfolio companies and their mergers and acqusitions strategy.

Google declined to comment but since April about eight of its ventures unit’s portfolio have acquired a peer or been snapped up, according to research by Global Corporate Venturing for this week’s Big Deal analysis.

These deals include Google-backed:

DocuSign buying Cartavi;

RelayRides acquiring Wheelz;

Nest Labs snapping up MyEnergy;

About.me picks up Wefollow;

HubSpot acquiring two companies, Chime and PrepWork; and

Egnyte agreeing to buy Bema.

And Google Ventures has been active in turning over its portfolio of more than 150 companies, with Facebook buying Parse and Yahoo acquiring Astrid.

Google sees itself as having the tools to help in M&A. Google has acquired more than 100 companies, including DoubleClick and AdMob, since 2001 and in May last year, David Lawee told a TechCrunch Disrupt conference that two-thirds of Google’s acquisitions have been successful. This is impressive as academic research indicates about 85% of M&A deals fail.

At the time of TechCrunch Disrupt, Lawee was then-head of corporate development and ran Google’s mergers & acquisitions group since 2008 after selling four companies while an entrepreneur.

Lawee earlier this year switched to set up Google’s late-stage strategic corporate venturing unit, Google Capital, and taken observer seats on Lending Club and SurveyMonkey as part of large rounds. A third, undisclosed investment by Google Capital has also reportedly been made.

Companies, such as technology companies IBM and Cisco and advertising services provider WPP, have long specialised in turning M&A from an art form into something like a science to deliver long-term value.

In an important speech at the US trade body’s National Venture Capital Association’s (NVCA) annual conference last week, Ginni Rometty, chief executive of IBM, said companies must keep reinventing themselves for higher value by creating new markets by buyer, category and geography and ultimately reinventing their core franchises, particularly in the technology industry with its cycles of “violent innovation and commoditisation”.

In the last decade, IBM has divested $15bn in value and acquired 140 companies; it has also committed to spending $20bn on acquisitions by 2015, and averages about one purchase a month, often from venture-backed companies identified through its impressive corporate venturing group run by Claudia Fan Munce.

Fan Munce, who is also a director of the NVCA, will be sharing her insights at our Global Corporate Venturing Symposium this week. She will be joined by WPP’s Sir Martin Sorrell and Mark Read, perhaps the UK’s preeminent corporate dealmakers and technology visionaries.

For most, however, the M&A battlefield for corporate venturing executives is only just starting to heat up.