The spinning out of the venture unit raises questions about AI startups’ appetite to have CVCs of potential competitors on their cap tables.
Alphabet’s early-stage investment unit Gradient Ventures is the latest large CVC to spin out from its parent, going independent after nearly a decade as it chases a more competitive market position for AI deals.
After registering a new management company called Grdnt LLC earlier this year, and bringing on more limited partners in addition to Google, the unit’s leaders want more distance from its longtime parent company to make it more competitive in the increasingly heated AI race, according to reporting from the Wall Street Journal.
Gradient’s leaders have reportedly wanted more independence, prompted by the growing wariness of some startups to take investment from large corporates that may be encroaching into the same markets they are competing in, raising questions about the extent to which other big tech names may follow suit.
While under a new independent structure, it will retain its management team led by managing partners Darian Shirazi and Zach Bratun-Glennon, who will continue to manage its existing funds.
An SEC filing from June showed Gradient Ventures was raising a $200m fifth fund, and had already formed Grdnt to manage it, but it was still under Google’s ownership.
Gradient’s recent investments this year include a seed rounds for AI medical device certification tool developer FormlyAI and AI-powered home search platform Jitty, as well as for AI infrastructure provider Cerebrium and AI-driven customer engagement software developer Venta AI.
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This is the latest in a string of corporate VC arms that have either spun out or found some other measure of independence from the parent company in the past couple of years.
Insurance companies Axa and Uniqa both spun out and rebranded their CVC units earlier this year, which are now called Atlantic Vantage Point and Shape Capital Partners, respectively.
Commercial airline JetBlue also decided to spin out and sell its VC arm, JetBlue Ventures, to aviation investment manager Sky Leasing, which has since rebranded it to SKY VC.
Providence Health Care spun out its CVC, Providence Ventures, which became Allumia Ventures, while Australian telco Telstra put even more distance between itself and its already independent VC arm, Telstra Ventures, last year when it became Titanium Ventures.
Intel’s CVC, Intel Capital, was also close to being spun out before a CEO change brought it back into the fold.
Fernando Moncada Rivera
Fernando Moncada Rivera is a reporter at Global Corporate Venturing and also host of the CVC Unplugged podcast.
