Google Ventures: Web giant scraps European start-up investment fund after only eighteen months

Decision comes amid concerns that another tech bubble is forming

Google Ventures has made more than 300 investments since its creation in 2009

American web giant Google is scrapping its European investment fund after just 18 months amid increasing scepticism about soaring tech start-up valuations. Google Ventures, the investment arm of Alphabet, Google’s newly formed parent company, confirmed it would operate as a global fund from January, rather than as two separate US and European pots.

The firm, which is rebranding as GV, said it would be “business as usual” for the London office, which has been the headquarters for the European fund since July last year. The decision comes amid concerns that another tech bubble is forming, with valuations of privately funded start-ups soaring, making it increasingly difficult to find value-for-money investments.

GV’s flagship investment is Uber. The taxi-hailing app has reportedly raised as much as $2.1bn (£1.4bn) in its latest private funding round, valuing it at close to $65bn – higher than the stock market value of US car-making giant General Motors.

A GV spokesperson said the move would give it “more flexibility and dollars” to invest in founders and companies “regardless of where they are based”. And, “Aside from this, it’s business as usual for the team in London – nothing else changes. We’ll continue to look for great European start-ups to invest in.”

Since its creation in 2009, Google Ventures has made more than 300 investments, but the European fund has backed just six companies in 18 months. It was set up to invest alongside other venture capital firms including London-based Index Ventures, which has backed Just Eat and Betfair, and California-headquartered Accel Partners, an early Facebook backer.

However, Google Ventures has been a far less active investor in the European start-up scene than its rivals.

Richard Holway, a veteran analyst at TechMarketView, said the valuations of tech start-ups has become “ridiculous”. He told The Independent: “I’ve been talking to a number of people recently and they all said now is not the time to be investing in highly valued tech companies. They really do believe that side of the marketplace is going to cool.”

In a blog post on the new GV website, Bill Maris, the chief executive, said life sciences and health would remain its most active area of investment next year.

“We’ll also look to make big investments in artificial intelligence, machine learning, security and other deep technological innovations that we can’t anticipate,” Mr Maris added.