And Google Begat...

The search giant's former employees are seeding tech startups—and shaping another wave of innovation

Infographic by Ronald Plyman

By Spencer E. Ante and Kimberly Weisul

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During the holidays last year, Aydin Senkut and Elad Gil gathered 50 of their friends at a health-food restaurant in Palo Alto. Over turkey burgers and tofu wraps, they talked about tech trends and how to get rich. Or, more precisely, how to get richer.

Senkut, Gil, and their dining circle are alumni of Google (GOOG), one of the greatest engines of wealth creation the U.S. has ever known. Since going public six years ago, Google has generated more than $170 billion for its employees and investors. Many of the millionaires the company has produced are young, wired into the latest developments in tech, and at ease with risk. Which explains why so many Google alums—including many of those at Senkut and Gil's gatherings—are active angel investors, attempting to add another zero to their bank accounts and another innovative company to their list of accomplishments. "I feel like we have such a strong network, it's almost like we've recreated Google outside of the Google walls," says Andrea Zurek, a 39-year-old backer of 26 startups.

More than 40 ex-Googlers have invested in about 200 fledgling companies since 2005, according to the research firm YouNoodle and reporting by Bloomberg BusinessWeek. At least a half dozen current Google executives, including CEO Eric Schmidt and co-founders Larry Page and Sergey Brin, are also financing young companies. Numerous angel-watchers say the Google group has more in common than just pedigree. Unlike many venture capitalists, the Googlers like to swap investment ideas and back startups together. They're also willing to take big chances. "[They're getting into] very risky deals that can be extremely rewarding," says Jeff Clavier, a veteran venture capitalist who founded Palo Alto-based SoftTech VC in 2004. "They have been very active as a group over the past two to three years."

MORE THAN MONEY

The results have been impressive. Companies backed by Googlers include Twitter, Tesla Motors, and gamemaker Tapulous. "As Google matures, its alums are continuing to have a huge impact on Silicon Valley and the tech industry," says Ron Conway, one of the Valley's most active angel investors, who has backed 190 companies, including Google, Facebook, and Twitter.

One reason for their success is that Google's angels have more to offer struggling entrepreneurs than just money. Bart Decrem, a Stanford University law grad, turned to the Google network when he was starting Tapulous in 2008. The company's Tap Tap Revenge game requires players to tap on-screen balls to the beat of a song—not exactly a sure thing of an idea. But Decrem thought the game might become a substantial business by selling it on Apple's (AAPL) iPhone. He raised $500,000 from a dozen angels, including Senkut and Zurek, who advised on strategy, connected the company with new partners in Asia, and helped it explore platforms for mobile phones that use Google's Android software. Today, Tap Tap games have been downloaded more than 25 million times and Tapulous is solidly profitable, with $1 million in revenues a month.

Google's Angels dabble in a wide variety of businesses. Zurek has money in a premium vodka maker and a South Korean frozen yogurt emporium. Yet the angels tend to concentrate their cash in what they know—search technology, mobile computing, and the consumer Internet. Already, Twitter, backed by former Google executive Chris Sacca, is the hottest startup in Silicon Valley, pioneering a new field of real-time communications. The online personal finance service Mint.com, with money from Senkut, proved so popular that market leader Intuit (INTU) bought it for $170 million last year and made founder Aaron Patzer one of its top execs. Search provider Powerset, backed by Senkut, was acquired by Microsoft (MSFT) in 2008, and its technology became a key part of the Bing search engine.

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