Google To Become A Venture Capitalist?

These days no business model is sacred to Google. The company, once known as a search engine has recently began stepping into the business of being a venture capitalist.

Google (GOOG) has begun making VC-style investments to the tune of about $500,000 or less in promising startups, often buying those companies afterward, according to partners at Silicon Valley VC firms who spoke on condition of anonymity. In an effort to keep spotting promising deals, Google has been hiring a stable of finance pros. And it has invested more than $1 million in a Mumbai-based investment firm called Seedfund to gain access to technology such as automatic translation software that could help spur growth in India.

By doing this, Google is hoping to fetch more attractive prices for a buyout stake in these companies, instead of paying the higher prices after venture capitalists have already funded the startups.

What are your thoughts on Google offering venture capital to start up companies? Is this good for smaller companies or a way to buy them out dirt cheap at the beginning of their growth cycle?

Business Week