NEW YORK – Hungry for a portfolio of investments that represent the scope of its global businesses, financial services powerhouse Merrill Lynch & Co. last month announced the launch of the Internal Venture Capital Fund, an investment vehicle aimed at seed-stage companies conceived by its employees.
Since detailing the initiative to its 72,000 employees, Merrill already has pushed five business plans into the due diligence phase. Although Fund Manager Eileen Marckioni would not reveal the details of those particular plans, she said each one falls squarely into the fund’s targeted sectors: mobile technology, knowledge management and e-commerce.
Four of Merrill’s business units have committed capital to the initiative. The Corporate Institutional Clients group, Merrill Lynch Investment Managers, the U.S. Private Clients group and the International Private Clients group all plan to seed three to four employee-conceived start-ups within the next six to nine months. Capital will be committed on an as-needed basis.
After an employee submits a business plan, the firm completes due diligence on the project and, if the plan is accepted, Merrill will not only fund the idea, but pay the employee $25,000 up front for the submission. The employee will also be given a 26 week leave of absence – half of it paid – to get the company off the ground.
For the employee, the internal venture fund promises to reduce the risk profile of starting a technology-based company. For Merrill, the program is intended to help strengthen the firm’s ability to attract and retain employees. At the same time, Marckioni said the company will draw on its own internal resources to support and grow its private equity, international investment banking and global private client activities.
Management and information technology consultancy Cap Gemini Ernst & Young, start-up accelerator efinanceworks LLC and venture firm Startupfactory will be partnering with Merrill Lynch on the project. In exchange for a piece of equity in the start-ups, partners will help advise, support and develop the companies.