Merrill Lynch gazes inward for venture ideas

With the investment banker's new internal venture capital fund, Merrill Lynch employees will get some big-time support from their bosses for side projects.

The New York-based company said Tuesday that the new initiative is designed to fund business plans created by Merrill Lynch employees. The fund will target new businesses that focus on technology shifts in the financial services industry in areas such as wireless, broadband and communications.

Merrill Lynch said that the new program is a means to attract and retain top employees in addition to boosting corporate innovation and creativity. The new fund will be supported by Merrill Lynch's private equity activities representing more than $1 billion in committed capital, the company said.

Merrill Lynch, which is one of the largest players in the investment-banking world, said it intends to invest in the new companies with the hope of becoming the first client or partner once the product or idea comes to market.

Other companies also are looking in-house for the next set of cutting-edge business plans.

Web consultancy Viant earlier this year launched a similar program in an effort to retain top consulting talent by funding its employees' start-up ideas. In return for a stake in the new company, Viant incubates and funds early-stage businesses conceived by its own employees.

Autodesk, widely known for its design software used by architects and engineers, also funds and helps launch its employees' start-up projects through its Autodesk Ventures unit. The program lets employees work for a large organization but also participate in start-up opportunities, according to the company.

Merrill Lynch said it has partnered with management consulting firm Cap Gemini Ernst & Young, incubator and consultancy Efinanceworks, and venture capital firm Startupfactory to help launch the development of the new businesses.

The company expects its fund to seed three to four new companies by early next year.