The share price of Google (NASDAQ:GOOG) is, at this very moment, up $6.78 and $1,221.69. That’s an increase of 0.59%. One year ago, 05 March 2013, that would have represented an increase of 0.81% as the share price was at 838.60. In case you have not followed the Google charts lately, the search engine has been experiencing a growth pattern from which it has rarely turned back. And, it is has been morphing into much more than a convenient search engine. It’s tentacles are reaching everywhere and it appears to be unstoppable.
Google is now actively extending its influence well beyond what most people perceive to be as its bailiwick. In addition to its apparent attempts to become all things to all men, the establishment of Google Capital in 2013 has created an investment vehicle through which Google intends to – and already has – acquire(d) minority shares in companies outside of its normal sphere of activity.
Google announced this morning that it had acquired a stake in the online real estate leader, Auction.com. Google has bought in with a $50 million investment on a valuation of $1.2 billion, gaining a seat on the board of Auction.com in return. The company says that, during 2013, more than $7 billion of property, both residential and commercial, changed hands through its website. As of this morning, the website listed 19,772 residences, 138 commercial properties and 83 parcels of land for sale.
David Lawee, a partner at Google Capital said that “Auction.com has quietly built one of the largest marketplaces on the web. We think Auction.com can fundamentally change how real estate, and particularly commercial real estate, can be bought and sold, leveling the playing field for smaller investors.” He likened Autction.com to eBay, saying, “Like EBay kind of drove transparency and created a marketplace for hard-to-find items, Auction.com is creating transparency in part of the real estate market.”
The important thing to remember here is that the tip of the Google Capital iceberg is just beginning to appear above the water line. Although it was only recently that the existence of the group was officially announced, it has, in fact been operational for about a year. Last year Google Capital invested in SurveyMonkey along with several other private equity entities. It also invested $125 million in the crowd funding startup, LendingClub. Google has tagged $300 million for similar investments in 2014, which includes the Auction.com transaction and an additional $40 million directed to Renaissance Learning in February.
Those who are investing in Google, and those who are thinking of investing, should ruminate on the salient comment from Jeff Frieden, co-founder and CEO of Auction.com. “It’s about a lot more than just the money. It’s a very strategic partnership.”
If Frieden is thinking that, you can rest assured that Google is too. Not just about Auction.com, but about each of Google Capital’s investments.