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Facebook Inc (FB), Yahoo! Inc. (YHOO), Microsoft Corporation (MSFT): Five Companies That Buy Their Innovation

Google

Google Inc (NASDAQ:GOOG)’s Google Ventures is an independent venture capital fund financed by Google. The fund was established on March 31, 2009 with an original capital commitment of $100 million but recently expanded to $300 million a year. Today, Google Ventures has over 150 companies in its portfolio. And in 2012, it had eight key exits to Yahoo! Inc. (NASDAQ:YHOO), Twitter, and AOL, Inc. (NYSE:AOL). Of those eight companies listed as key exits, two were bought by Google itself.

The fund is an important piece of Google Inc (NASDAQ:GOOG)’s innovation strategy because it brings in revenue from IPOs and from selling companies. But, most importantly, the fund establishes a direct link between innovative start-ups and Google Inc (NASDAQ:GOOG).

Johnson & Johnson (NYSE:JNJ)

Johnson & Johnson Development Corp (JJDC) is the venture capital subsidiary of Johnson & Johnson (NYSE:JNJ) that focuses on health care and technology venture funding. The subsidiary was established in 1973, making it one of the oldest CVCs to date. JJDC concentrates on creating growth opportunities for Johnson & Johnson. Used in sync with Johnson & Johnson (NYSE:JNJ)’s traditional portfolio and market presence, JJDC helps the firm identify new business openings and helps support the innovative process of Johnson & Johnson (NYSE:JNJ)’s operating companies. JJDC also invests in international markets and has offices in the USA, Belgium and Israel.

Doing it all

Many companies have innovative environments. Fewer have strong corporate development divisions. But even fewer have corporate venture capital subsidiaries. However, companies achieve the best results when they integrate all three innovative dynamics. So – just like the charts above illustrate – when you find a firm that is great at making acquisitions, buy in big and hold on for the (profitable) ride.

The article 5 Companies That Buy Their Innovation originally appeared on Fool.com and is written by Marie Palumbo.

Article by Santiago Rodriguez, edited by Chris Marasco. Neither has a position in any stocks mentioned. The Motley Fool recommends Facebook, Google, and Johnson & Johnson. The Motley Fool owns shares of Facebook, Google, Johnson & Johnson, and Microsoft. Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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