Alphabet’s “moonshot factory” X is spinning out more startups and here’s why that matters

Alphabet

Alphabet’s experimental research arm, X– often called the “moonshot factory”--  is evolving its approach to innovation. Speaking at TechCrunch Disrupt, X’s CEO Astro Teller revealed that the lab is now focused on launching its most promising projects as independent startups, rather than keeping them within Alphabet’s corporate umbrella. The shift, he said, allows these projects to scale more freely and attract broader investment.

Central to this new model is Series X Capital, a venture fund set up exclusively to support companies born out of X. The fund has raised over $500 million and is led by former YouTube executive and Facebook CFO Gideon Yu. Alphabet is only a minority investor, which Teller says is intentional: “If Alphabet was the sole limited partner, the fund would still effectively sit inside Alphabet, and that defeats the purpose.”

Unlike Alphabet’s other investment arms — GV, CapitalG, and Gradient Ventures — Series X Capital can invest only in companies spun out of X. The structure gives these ventures access to external capital and independence while keeping a strategic connection to Alphabet.

The approach marks a major evolution for X, which has previously turned projects like Waymo (self-driving cars) and Wing (drone deliveries) into Alphabet subsidiaries. Teller said the team has learned that not all projects benefit from Alphabet’s corporate scale. “Some of these ideas can move faster and find their footing better outside Alphabet, while still staying close enough for strategic collaboration,” he explained.

At the core of X’s philosophy is what Teller calls “intellectual honesty” — a process of aggressively testing ideas to determine whether they’re worth pursuing. The lab defines a “moonshot” as a project that tackles a massive global problem, proposes a solution that could make the problem disappear, and relies on breakthrough technology to make it possible.

“If someone proposes a moonshot and it sounds reasonable, we’re not interested,” Teller said. “Because by definition, that wouldn’t be a moonshot.” X’s teams actively search for reasons to abandon ideas early. “We spend a small amount of money to test wild ideas,” Teller added. “If it turns out to be crazier than we thought, great — we celebrate killing it and move on.”

This disciplined approach, he argues, ensures that only the most viable moonshots survive. By spinning these projects out through Series X Capital, Alphabet is giving them the flexibility of startups with the technical backing of one of the world’s most powerful tech ecosystems.