Alphabet’s X Lab Shifts Strategy, Spins Out Moonshot Projects as Independent Companies
Alphabet’s innovation lab, X, is changing how it brings ambitious technology projects to market, increasingly launching them as independent companies backed by a new venture fund, Series X Capital, rather than keeping them within the larger Alphabet structure.
The shift, revealed yesterday at TechCrunch Disrupt 2025 in San Francisco, centers around Series X Capital, a fund exceeding $500 million led by former YouTube and Facebook executive Gideon Yu. Unlike other Alphabet investment arms, Series X is legally required to invest solely in X spinouts. “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,” explained X head Astro Teller. “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.” This move aims to accelerate development by removing bureaucratic hurdles and fostering a more entrepreneurial environment for these high-risk, high-reward ventures.
X has historically graduated successful projects like Waymo and Wing into Alphabet subsidiaries, but Teller noted that some projects thrive outside of the corporate structure. The lab’s unique approach to innovation—actively seeking to disprove ideas—is central to this strategy. “If someone is proposing a moonshot and it sounds reasonable, the company isn’t interested, because that, by definition, wouldn’t be a moonshot,” Teller said. X employees are offered equity in the spun-out companies comparable to what they’d receive as early-stage founders, incentivizing participation and detachment from ideas. Recent spinouts include Taara and Heritable Agriculture, with the newest being Anori, an AI platform for the real estate and construction industries, addressing a sector responsible for a significant portion of global waste and carbon emissions, according to the United Nations Environment Programme.
Teller indicated that X will continue to prioritize rigorous testing and a high “failure” rate – currently around 98% – as a key component of its innovation process. The company expects to continue spinning out promising projects, providing them with the resources and independence needed to scale and address significant global challenges.
