BOSTON – Joining a growing number of American corporations that are adding corporate venture capital units to complement in-house research and development groups, software developer Artificial Life Inc. in June acquired a majority stake in Frankfurt, Germany-based Cybermind Ventures Inc.
The new entity has been renamed Artificial Life Ventures Inc. and will be used to gain access to technology companies that complement Artificial Life’s “bot” technologies, such as interfaces, streaming video, speech applications, Internet service providers and content sites.
Many corporations have opted to form venture units in lieu of or in addition to in-house research and development because VC investing is easier and more lucrative. Semiconductor manufacturer Intel Corp. (VCJ, July, page 5) is a longtime investor in venture capital, and a slew of younger companies have recently joined the fray, such as Seagate Technology Inc. (VCJ, June, page 5) and E*Trade Group Inc. (VCJ, May, page 5).
“The philosophy is rather than have our shoulder to the technological grindstone, we should … take a vested interest in [young technology companies],” said Artificial Life Chief Financial Officer Rob Pantano, adding that the company hoped venture investing would fuel research and development efforts.
Artificial Life, founded in 1994, develops and sells intelligent software bots, interactive virtual beings that are able to converse with human beings, for the Internet. Bot technology may be the next en vogue Internet technology, as bots are thought to have useful implications as “virtual salespeople” for e-commerce Web sites and other customer service usages. Artificial Life, which received private equity financing from Cybermind AG, the venture unit’s former parent company, went public last December.
Artificial Life Ventures, which will be headquartered in Boston or New York, will focus on deals in the United States, Germany, Switzerland and Eastern Europe. Mr. Pantano could not offer a range for deal sizes at press time. Artificial Life Chairman and Chief Executive Eberhard Schoeneburg and Cybermind CEO Holger Timm will head the venture unit, and there are plans to hire venture capitalists to manage the effort.
Mr. Pantano was uncertain whether Artificial Life Ventures ultimately would be a captive venture unit or a limited partnership that invests third-party capital. “We’re really just going to take a wide-eyed view right now,” he said.
Cybermind’s Mr. Timm could not be reached for comment by press time.