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Google Ventures beefs up fund size to $300M a year

Google will increase the cash it allocates to its venture-capital arm to up to $300 million a year from $200 million, catapulting Google Ventures into the top echelon of corporate venture-capital funds.

Access to that sizeable checkbook means Google Ventures will be able to invest in more later-stage financing rounds, which tend to be in the tens of millions of dollars or more per investor.

It puts the firm on the same footing as more established corporate venture funds such as Intel's Intel Capital, which typically invests $300-$500 million a year.

"It puts a lot more wood behind the arrow if we need it," said Bill Maris, managing partner of Google Ventures.

Part of the rationale behind the increase is that Google Ventures is a relatively young firm, founded in 2009. Some of the companies it backed two or three years ago are now at later stages, potentially requiring larger cash infusions to grow further.

Google Ventures has taken an eclectic approach, investing in a broad spectrum of companies ranging from medicine to clean power to coupon companies.

Every year, it typically funds 40-50 "seed-stage" deals where it invests $250,000 or less in a company, and perhaps around 15 deals where it invests up to $10 million, Maris said. It aims to complete one or two deals annually in the $20-$50 million range, Maris said.

Lacking superstars

Some of its investments include Nest, a smart-thermostat company; Foundation Medicine, which applies genomic analysis to cancer care; Relay Rides, a carsharing service; and smart-grid company Silver Spring Networks. Last year, its portfolio company HomeAway raised $216 million in an initial public offering.

Still, Google Ventures lacks superstar companies such as microblogging service Twitter or online bulletin-board company Pinterest. The firm's recent hiring of high-profile entrepreneur Kevin Rose as a partner could help attract higher-profile deals.

Soon it could have even more cash to play around with. "Larry has repeatedly asked me: 'What do you think you could do with a billion a year?'" said Maris, referring to Google chief executive Larry Page.

Free Zone push to reach out to the 'next billion'

Google launched a service on Thursday it hopes will push millions of people in the developing world to access the Internet - and Google's ads - via basic mobile phones.

Google is launching the service, called Free Zone, first in the Philippines via local carrier Globe Telecom. The service allows phones with an Internet connection but limited functionality to access basic Google products like search, email and its social networking service Google+ for free.

Users could access websites that show up in Google's search results for free, but any website outside those results would prompt an invitation to subscribe to the mobile operator's data plan.

"It's aimed at the next billion users of the Internet, many of whom will be in emerging markets and encounter the Internet first on a mobile phone, without ever owning a PC," AbdelKarim Mardini, product manager for Google, told Reuters.

Google and Globe hope that by offering a free layer of services they will entice users of so-called feature phones to move beyond just making phone calls and sending SMS messages to sign up for Internet services.

Such services are more lucrative for carriers. Google makes most of its money through ads on web pages. It says it plans to roll out the service in other countries soon.

While developing countries like the Philippines have been enthusiastic early adopters of cellphones, there are still millions who either use phones too basic to be used for Internet services, or who are reluctant to shell out for more expensive services.

Phones running Google's Android operating system now account for three quarters of all smartphones shipped, according to consultancy IDC. But that still leaves a lot of phones.

The GfK Group, a research company which measures consumer habits, reported in September that while smartphone sales are growing rapidly in Southeast Asia, the more basic feature phones still outnumber their more expensive counterparts.

The Philippines, for example, saw a three-fold growth of smartphones in the 12 months up to September, but despite boosting their share, such devices still accounted for only 24 percent of all mobile phones.

Globe and Google are not the only players in the Philippines to target non-smartphone users by offering them a cheaper way to access Internet services.

Since launching a pared down Internet service last year, for example, Globe rival Smart Communications said the half million users who signed up spent 150 percent more on average per month than its other subscribers.

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