Google Ventures’ Startup Lab Building Companies Thanks to Corporate Resources

A small team has toiled away since early October in a quiet corner of Google Inc.’s sprawling campus in Mountain View, Calif., on a project related to the discovery of human antibodies.

The group is not part of Google, and has nothing to do with Google’s flagship Internet search business. But Google has provided the team—part of the secretive Lebanon, N.H.-based biotech company Adimab—with a workspace fitted with top-notch amenities, including high-speed Internet access, conference rooms and a ping-pong table.

Adimab and four other companies are among the first tenants of the new Startup Lab managed by Google’s venture capital arm.

The lab represents the latest expansion of Google Ventures, the search engine’s $100-million-a-year fund which launched in March 2009, providing Google with an opportunity to chase the big financial payoffs that can come with venture investing while helping it build ties to the fast-paced world of startups.

The on-campus lab is designed to let young companies funded by Google Ventures draw from the deep well of resources within the world’s No. 1 Internet search company. Google staffers offer tips on anything from product design to recruiting, while also providing the startups with an instant Silicon Valley presence, according to Bill Maris, managing partner of Google Ventures, in an interview at Google’s headquarters last month with Reuters.

And with growing competition to fund the youngest, early stage startup companies, Google Ventures wants to set itself apart from other venture firms and angel investors.

“We plan to be very active in 2011 in the seed space,” said Maris, referring to the funding of early stage companies. “Startup Lab is an expression of that interest.”

The 15,000-square foot facility can accommodate 100 to 120 people, and is composed of equipment that Maris and Google Ventures Partner David Krane pulled together over the summer. The pair found a vacant building owned by Google and furnished it with desks inherited from Google’s acquisition of mobile ad firm AdMob, which the company bought in 2009 for $750 million.

The lab’s 1-gigabyte broadband network is separate from Google’s corporate network so it can provide a layer of separation and privacy for the labs’ tenants.

In addition to the five startups that use the lab, Google Entrepreneur-in-Residence Craig Walker, the former group product manager of Google Voice, has also set up shop with a small team as he develops a new company.

The Google calling card in Silicon Valley, it’s the equivalent of a golden ticket at Willy Wonka and the Chocolate Factory.

Tom HaleChief Product OfficerHomeAway

“We wanted to have a place where someone like Craig, or other talented entrepreneurs… maybe they don’t even have a company yet; they just want a place to work,” said Maris. At this point, Google Ventures does not plan to bring on further EIRs into the Startup Lab.

Golden Ticket

The lab’s opening comes as Google’s domination of the Web faces challenges from rivals, such as Facebook and Twitter. Over the past year, several of Google’s top engineers and executives have defected to Facebook. One such defector, Google Maps co-creator Lars Rasmussen, said in a newspaper interview that it can be “very challenging” to work at a company the size of Google.

The Startup Lab underscores how Google, which has more than 23,000 employees worldwide, is seeking to wield its size as an asset to help it forge ties with entrepreneurs and startups.

“The Google calling card in Silicon Valley, it’s the equivalent of a golden ticket at Willy Wonka and the Chocolate Factory,” said Tom Hale, the chief product officer of Austin, Texas-based HomeAway, which operates vacation rental sites, such as VRBO.com, and is funded by Google Ventures, as well as Technology Crossover Ventures, Institutional Venture Partners, Redpoint Ventures, Trident Capital and Austin Ventures.

HomeAway has one engineer working in the Google Ventures Startup Lab two to three weeks a month, and plans to station a small product development group at the site in the coming months.

Since moving in to the lab, HomeAway has worked with Google on technical issues involving scaling the architecture of its Web properties. HomeAway is also seeking guidance from Google on how to manage a program that allows engineers to devote a portion of their work time to personal projects, similar to a well known Google policy that lets employees devote 20% of their time on other pursuits.

Google Ventures, which has grown from two partners in March 2009 to about 20 staffers today, has a small team of experts whose job is to help portfolio companies design their products. Google Ventures is also about to bring on its first full-time recruiter to help startups hire engineers.

The Startup Lab is different from other programs that combine mentoring and early stage funding, such as Y Combinator. The plan at Startup Lab is not to bring in a new batch of entrepreneurs every year and give them a set curriculum, but to provide an easy way for startups to take advantage of Google’s resources.

Nor is Google Ventures turned off by the competition to fund early stage companies, which has led some venture investors, such as Marc Andreessen, to declare that seed investing has become less attractive than it was a few years ago.

“Everyone kind of talks about this seed bubble and whatnot, but it doesn’t enter our calculus when we’re making our investment decision,” Maris said. “A price isn’t high or low, it’s either fair or not. So maybe for a seed round or series A, the price seems high, but maybe it’s deserved.”