Google Capital Makes Investment In Care.com, Its First Public Company
SAN FRANCISCO — In its three years of existence, Google Capital has been known for its investments in privately held start-ups like SurveyMonkey and Credit Karma.
Now it is expanding into investing in publicly traded companies — starting with Care.com, a specialist in helping connect families and caregivers of all stripes.
Google Capital said on Wednesday that it had invested $46.35 million in the $278 million company, making it the single biggest shareholder.
The transaction represents a new step for Google Capital, one of the investment arms of the technology conglomerate Alphabet. Unlike Alphabet’s GV, which is better known for investing in early-stage companies, Google Capital tends to invest in older “growth stage” businesses that are looking to expand.
But Google Capital has not previously invested in publicly traded companies. Now it is following in the footsteps of investment firms like Silver Lake that have bought preferred shares in publicly traded companies.
Care.com was founded in 2007 and went public in early 2014. The company offers customers a range of services that include babysitting, senior care, housekeeping and pet sitting, as well as options to manage taxes for nannies through its HomePay service.
To Care.com’s founder and chief executive, Sheila Lirio Marcelo, bringing in Google Capital provides money to help the business expand — and gain access to what she said were the resources on tap at Google and its parent, Alphabet.
“It’s a huge opportunity for Care.com,” she said in a telephone interview. “Through Google Capital, we can get access to Google and Alphabet’s experts.”
Care.com first became known to Google when the technology company signed up as a customer five years ago. That eventually prompted Laela Sturdy, a partner at Google Capital who was looking to use Care.com’s services, to inquire into investing in the company.
“Care.com exemplifies the kind of company that we want to invest in,” Ms. Sturdy said in an interview. “We’ve been focused on growth-stage companies, and really our only criteria is their having Google-sized aspirations.”
Under the terms of the deal, Google Capital will buy convertible preferred stock in Care.com at a conversion price of $10.50 a share, or 24 percent above Wednesday’s closing price for its common stock. The preferred shares pay an annual interest rate of 5.5 percent.
Also, Ms. Sturdy will receive a seat on the board.
Connected to Wednesday’s deal, Care.com said that it would buy back 3.7 million shares owned by an early backer, Matrix Partners. Ms. Marcelo said the move limited the dilution of the Google Capital transaction to roughly 2 percent.
Morgan Stanley and the law firm Latham & Watkins advised Care.com.
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