Google invests in Chinese social-networking firm

Mar.25, 2008 in Market Outlook

By John Letzing, MarketWatch

Last Update: 6:31 PM ET Mar 25, 2008

SAN FRANCISCO (MarketWatch) — Google Inc. disclosed Tuesday it has invested $1
million in Chinese online social-networking technology provider Comsenz Inc., a
start-up originally backed by former Google board member and venture capitalist
Michael Moritz.

Google (GOOG) said in a regulatory filing that it made its investment in Comsenz
in July, as part of Series B round of funding for the closely held firm.

Moritz, a general partner at venture capital firm Sequoia Capital who announced
his resignation from Google’s board roughly one year ago, has a more than 10%
interest in a Sequoia fund invested in Comsenz, Google said.

Reports of Google’s investment in Comsenz surfaced in Chinese media last year,
though the speculation had it that Google was putting roughly $5 million into the
Beijing-based company.

Moritz and Sequoia were among the original financial backers of Google, and he
gained a board seat with the company in 1999. In March of last year, Google
announced that Moritz would not seek re-election to the board in order to focus
more attention on his duties at Sequoia.

Google, along with rival U.S. Internet firms Yahoo Inc. (YHOO) and Microsoft
Corp. (MSFT), is seeking a stronger foothold in the growing Chinese Internet
market.

Google currently competes directly in the Chinese Internet search market, while
Yahoo holds a large ownership stake in Alibaba Group, the operator of Chinese
online marketplace Alibaba.com Ltd. (ALBCF). Microsoft also has a direct presence
in China as well as a number of local partnerships with Chinese Internet and
publishing companies.

Comsenz provides technology used to support a number of Chinese online bulletin
boards, blogs and Web sites. Comsenz has received an undisclosed amount of
funding from Sequoia, though Google says in its filing that through its combined
Chinese funds, Moritz’s firm holds more than a 10% stake in the company.

Google notes in its regulatory filing that its audit committee reviewed and
approved the Comsenz investment, as part of the company’s “procedures for
entering into transactions with related parties.”

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