Making judicious investments in early stage next-gen plays is a great way to understand emerging uncertainties for a firm in a rapidly changing market. These investments act as real options, providing the firm with leverage in case any of the opportunities bloom. In the high-tech internet & media markets, this clearly seems to be the way.
Its interesting to see Google (and its brethren) take on a VC role - particularly in relation to its investments in India.
From Google's New Role: 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.
...invested more than $1 million in a Mumbai-based investment firm called Seedfund to gain access to technology such as automatic translation software
Among the reasons for the corporate-investing comeback: an upswing in research-and-development spending after the tech-stock crash; the need to spot promising startups in China, India, and Russia; and increased shareholder willingness to tolerate the quarterly vicissitudes of venture investing in order to create long-term value.
And according to ET's September article by Arun Natarajan:
Google has invested into three early-stage VC funds - VentureEast TeNet Fund, Seed Fund and Erasmic Fund. And if that wasn't enough, it has also joined the India Angel Network - a group of successful entrepreneurs who invest in start-ups - as an institutional member.
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