Alphabet’s X moonshot factory is shifting how it brings ambitious technology projects to market, increasingly spinning them out as independent companies rather than keeping them within the Alphabet corporate structure, X’s head honcho, Astro Teller, revealed at TechCrunch Disrupt this past week.
The strategy hinges on a dedicated venture fund that exists solely to invest in X spinouts, and in which Alphabet is only a minority investor. “If Alphabet was the sole LP, the fund would be inside of Alphabet, and then when they invested in something from X, it would still be inside Alphabet,” Teller explained onstage. “So Alphabet can be a small LP, but if it’s more than a small LP, we undo the thing that we’re trying to accomplish.”
That fund is Series X Capital, which has raised over $500 million and is run by Gideon Yu, a former YouTube executive and Facebook CFO. Bloomberg first reported the fund’s existence last year. Unlike Alphabet’s other investment arms — GV, which invests broadly in early-stage startups; CapitalG, which backs growth-stage companies; and Gradient Ventures, which invests in AI startups — Series X Capital is legally obligated to invest exclusively in companies spinning out of X.
The approach represents a meaningful evolution for X, which has historically graduated successful projects like Waymo and Wing into standalone Alphabet subsidiaries. Teller said the lab has learned over the past decade that while some moonshots benefit from Alphabet’s resources and scale, others “can go faster and won’t really benefit from being part of Alphabet because they’re just so different.”
“Landing it just outside the Alphabet membrane, where we can be very tight with them, get a lot of strategic co-benefit with them, but not necessarily control them, makes sense,” he said.At Disrupt, Teller explained that the spinout strategy only works because of X’s ruthless approach to …