Merrill Lynch & Co. on Wednesday started a venture capital fund that will invest in technology and technology-related companies that are the brainchildren of its own employees.
Merrill has three partners in the Internal Venture Capital Fund: Startupfactory, a venture capital firm working with entrepreneurs in the information technology and telecommunications industries; Cap Gemini Ernst & Young, a management and IT consulting company; and efinanceworks, which develops online finance businesses overseas.
The New York brokerage giant is to seek companies focusing on mobile technology, knowledge management, and e-finance infrastructure and communications.
The fund is to invest seed capital to push forward the business plans of technology companies developed by Merrill employees, according to Eileen Marckioni, who will manage the fund for Merrill.
Ms. Marckioni said that at least three internal start-ups have been earmarked to get capital during the next six to nine months. She declined to divulge how much money would be involved, but said the amounts invested by Merrill and each of its partners will depend on the type and size of company.
After the initial round of funding, Merrills existing venture capital business, which has more than $1 billion of capital committed, will have a chance to participate in second- and third-round financings, Ms. Marckioni said.
Merrill will welcome proposals for start-ups from all four of its business units, she said. We have over 72,000 employees thats a lot of ideas.
Before April, when the Nasdaq stock market began its slide, banking companies and other financial institutions were rushing to invest in start-up technology companies. But the markets fall has left a sour taste for many. Most recently, Chase Manhattan Corp.s venture capital business, heavily invested in the technology sector, has come under fire from analysts who fear this could depress its fourth-quarter earnings.
Ms. Marckioni said Merrill is not concerned that the internal fund would be affected by volatility in the technology sector, and she stressed that the companies the fund invests in will be chosen according to Merrills own technology needs.