This morning (London time) I was on a panel featuring Simon Levene of Yahoo, among others. The focus was Web 2.0 and venture capital (fittingly, it was sponsored by FirstCapital). Simon, who is MD here for Yahoo in Business Development, mentioned something that struck me as both obvious yet somehow not stated very clearly. Addressing the audience of mostly VCs, he said:
“Folks like Yahoo will be competing with you for deals.”
Levene mentioned to me later that Google has even set up a fund to compete with VCs for early stage company financing (I had not head this before), and that Yahoo feels it can and must compete to buy early stage companies before VCs can get in with larger financing. An interesting development. He added that entrepreneurs are weighing the risks of having to execute against the exit requirements of a second or third round of financing, vs. the bird in the hand of a deal with a big player like Yahoo, and often, as with Flickr, they are going with the platform.
UPDATE: I pinged good sources at Google, who declare definitively that Google is not running a VC fund….