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Google is building its own in-house incubator

Called Area120, it will allow Google employees to develop their ideas and pitch them to Google

Financial trends and news by Steven Loeb
April 25, 2016
Short URL: http://vator.tv/n/44fc

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Over the last few years Google has been one of the leaders when it came to mergers acquisitions, gobbling up startups left and right. What if it could find, and nurture, those startups in-house, though? That would save it both time, and potentially money, if it wanted to bring them on board. 

Now that's just what the company has done, launching a new incubator so that teams within Google can work on their projects, according to a report from The Information on Sunday. 

Called “Area 120,” it will be overseen by Don Harrison and Bradley Horowitz, who are both long-time Google executives. Harrison is Vice President of Corporate Development, while Horowitz is VP of Streams, Photos and Sharing at Google.

To join, teams of Google employees have to submit a business plan and apply. If they are accepted, then they are allowed to work full-time on their idea over a few months. After that, they'll be given the opportunity to pitch Google on creating a new company, and for additional funding.

If successful, these companies would obviously immediately be on Google's radar for a potential "spin-ins," where they would be acquired by Google to become part of the family. The company would get a first look at some emerging startups, and gobble them up before they can go somewhere else.

Google has been an acquisition fiend in recent years, though its output has lessened considerably recently. 

Last year the company made 16 purchases, down from a pretty extraordinary 35 acquisitions in 2014. Not only that, but it's the only company with more than 100 in the last five years. Some of the companies it bought last year include PixateOysterJibe Mobile and Divshot

So far this year, though. things have slowed down, as Google has only purchased one company: Singapore-based communications service Pie. With companies being started in-house, the number of acquisitions could start climbing again. 

There's an additional benefit for Google: it might be a good way to stop good employees from leaving, which is an issue many large tech companies have to deal with.

Allowing Google employees to use their time and talent to start new companies has long been part of the company's ethos. Larry Page and Sergey Brin even wrote about it in their IPO letter in 2004. 

"We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google," they wrote. "This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner."

VatorNews reached out to Google for confirmation of this report. We will update this story if we learn more. 

(Image source: amazelaw.com)


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