Exclusive: Google buys part of Hattery

September 19, 2013, 10:27 PM UTC

FORTUNE — Google has quietly “acqui-hired” most of the team at Hattery, a San Francisco-based digital innovation lab and venture capital firm founded by former Google (GOOG) employees Josh Mendelsohn, Joshua To and Luis Arbulu.

Mendelsohn tells me that the deal closed a couple of months ago, with most of Hattery’s innovation lab staff now working within various Google departments. This includes Joshua To, while Luis Arbulu has joined Samsung (SSNLF).

One thing Google is not getting, however, is equity in the startups that Hattery worked with over the past couple of years.That remains with the founding team. The portfolio includes Bright Funds, Cloud Physics, Copper, Hipiti and Zubhium.

Hattery had planned to raise a traditional venture capital fund earlier this year, but Mendelsohn says that the process was ended once the Google opportunity arose.

Mendelsohn is not joining Google, but will continue to advise the next incarnation of Hattery. He says that includes the Brannon Street workspace, plus an advocacy goal of bridging San Francisco’s technorati and the city’s broader community. That effort is led by new general manager Ricky Opaterny, who also is an ex-Googler.

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