The old days of Silicon Valley getting their funds from companies or individuals looking to take a risk on venture capital are a thing of the past. They still exist, but in many ways it’s the bigger companies with less interest in investment profits and more interest in cutting-edge innovations that represent the future of Silicon Valley.
Companies like General Motors, American Express, and Starbucks are paying a lot of attention to startups that need money. Turning a profit would be nice but it’s definitely not the goal. Their reasoning is that if they invest into the brightest minds and brilliant concepts that are currently cash-strapped, they’ll get a head start on the newest technologies before they hit the mainstream.
Instead of just partnering with Square, Starbucks invested $25 million into the company. They will have the mobile payment solution available in 7000 stores in the US and hope that it will make buying coffee that much simpler as a result. If their investment makes money, great, but that’s not the goal.
As I posted on Techi:
Partnerships and agreements are not always enough, though. In the past, there would have been a simple agreement put in place that was mutually beneficial to both companies. Today’s startup environment demands more and Starbucks opened their wallets in hopes of turning a profit, but more importantly they hope to help the company continue to innovate. That’s where much of venture capital is heading today.