After ILM, Part II: A Glimpse Under Google Ventures’ Hood

Following Google’s Carter Maslan at ILM:10 last week, we got to hear about Google Ventures’ investment parameters from partner Wesley Chan.

The fund invests in tech companies at every stage from seed to mezzanine. Its portfolio includes HomeAway, 23andMe, ngmoco, SCVNGR and other oddly punctuated names. But new to me was the fact that all of its investments are financial rather than strategic.

There have been investments like Urchin (part of Google Analytics) when portfolio companies were fully acquired and strategically folded into Google products. But financial metrics are the sole driver, given cases of unrelated (stem cells) or conflicting (search) products.

That said, diligence can include evaluating Google’s ability to steer a company toward financial gains. This translates to utilizing Google’s broad and cross-disciplined engineering talent to advise and consult portfolio companies.

“We can use the experience and knowledge of Google to help them grow,” said Chan. “That can mean UI designers to help them build a better Web page, or intellectual property to [help them] grow faster than they could have.”

As far as investment outlook, Chan believes e-commerce has mostly matured, with little chance of exits on the horizon. He’s looking instead at LBS mobile technologies that utilize next generation hardware like near filed communications (NFC) for payments.

“The [Android-based Samsung] Nexus S has NFC,” said Chan, “and it has more processing power than the desktop computer I had in college.”