TechCrunch has decided that Google’s foray into corporate venturing, and corporate venturing generally, is a bad idea. Corporate venturing is one way that larger life science companies try to get access to the IP created by smaller innovative biotechnology companies. Merck Serono, for example, has recently launched such a fund and companies ranging from Takeda through to Biogen also have active venturing funds. At heart TechCrunch’s argument is that :
Starting a venture fund is not really the best use of Google’s capital. It is in effect saying that it has so much cash it doesn’t know what to do with it. Google would be better off paying a dividend to shareholders or buying back stock than playing venture capitalist, no matter how smart its venture capitalists might be.
It would be interesting to see the overall rate of return of some of the older venture funds in the life sciences to test whether TechCrun’s arguments hold water; for example the Novartis Venture Fund, formed in 2001, SR-One GlaxoSmithKline’s fund, formed in 1985 and Johnson & Johnson Development Corporation, formed in 1973.
