Loon and SoftBank’s HAPSMobile both aim to provide internet connectivity to people in far-flung regions, and the investment comes as part of a new long-term partnership that includes collaboration on both technology and commercialization efforts. The agreement also gives Loon the option to reciprocally invest $125 million in HAPSMobile in the future.
Google parent company Alphabet has increasingly sought external funding for its stand-alone subsidiaries, called “Other Bets,” as it aims to cut costs and increase revenue for these non-advertising businesses, which range from security firm Chronicle to self-driving-car unit Waymo.
Alphabet’s health care company Verily, for example, raised a $1 billionfunding round led by private equity firm Silver Lake in January, adding to a previous $800 million investment led by Singapore’s Temasek Holdings. Similarly, wind-turbine business Makani has raised money from Shell while Waymo is also seeking external funding, sources told The Information in March.
Alphabet could afford to fund these efforts on its own—it has more than $100 billion in cash, after all—but this capital strategy makes its Other Bets more financially accountable at a time when Wall Street is wary of saturation in the advertising market that currently drives Google’s sky-high profits. It also increases the likelihood that these Other Bets will eventually be spun off as completely separate companies as investors seek a return on their stakes.