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Anna Patterson talks Gradient Ventures, Google’s new AI fund

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It’s been pretty obvious for a few months now, but Google has finally admitted that it’s running its own investment fund targeting machine intelligence startups. The fund will go by the name Gradient Ventures and provide capital, resources and education to AI-first startups.

Google isn’t disclosing the size of the fund, but the company told us that it’s being run directly off of Google’s balance sheet and will have the flexibility to follow on when it makes sense. This is in contrast to GV (formally Google Ventures) and Capital G, which operate as independent funds.

“As we get busier, it will be separated, but for now we will run off of Google’s balance sheet,” Anna Patterson, Google’s VP of engineering and managing partner of Gradient Ventures told me in an interview.

Ever since Google CEO Sundar Pichai called on the tech giant to become “AI-first,” teams have been full steam ahead putting the vision into practice. Google purchased machine learning community Kaggle and launched a machine learning competition for startups at Google Cloud Next in partnership with Emergence Capital and DCVC.

Google Ventures has forged an industry reputation of being an adept AI investor, regularly bringing in technical talent to help diligence startups. And Google Launchpad has been hosting events targeting AI companies — it held an event for female founders working on AI last month.

“We have told all folks, including GV, that we are happy to lead and partner,” Patterson added.

Patterson tells me that there’s value to be created from an investment unit solely focused on AI. Her team is creating an engineering rotational program so that top Google talent can work to hone the technical products and services of others. The fund will also be running AI bootcamps at various levels and working with founders to productize their technologies.

There’s little question that Google has the resources to be a successful value-add AI player, but it’s tough to know how all the activity will translate in the mind of startup founders. As I mentioned earlier this morning in my story about Toyota’s new AI fund, investing in AI is incredibly challenging.

Founders are often concerned about working with corporates early on. Google promises to be an ROI investor on all fronts, but the internal decision to run the fund off balance sheet is sure to cause some founders to beg the question.

“We do tell them that everything that happens stays within our team,” asserted Patterson. “We are ROI and not strategic investors.”

Google Cloud has the clear benefit of building a community around TensorFlow and other cloud services. GV and Capital G have a proven track record of investing and GV, at least, is conventionally considered to be a tier-one venture capital fund on its own.

“The biggest benefit for Google is spurring innovation in the AI space,” continued Patterson.

In an unconventional move, one of the fund’s initial investments, Algorithmia, an algo marketplace, announced its Series A round from Gradient Ventures in advance of the fund formally being announced.

Axios first scooped the existence of the fund back in May, prior to the funding announcement from Algorithmia. Patterson explained to me that this was the result of Algorithmia’s needing to file their Form D before Gradient was ready to speak to its strategy.

If the past is a guide, Google will figure it out — but I presume Gradient Ventures will be learning as much over the next year as the founders it works with. To this point, Patterson says she will be spending all of her time on the fund moving forward.

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