Microsoft's Revamped Ventures Division Will Focus On Startups - InformationWeek
IoT
IoT
Cloud
News
5/31/2016
03:05 PM
Connect Directly
Twitter
LinkedIn
Google+
RSS
E-Mail
50%
50%

Microsoft's Revamped Ventures Division Will Focus On Startups

Microsoft has repositioned Microsoft Ventures, its internal startup accelerator, to focus on investments in early-stage businesses.

Google Apps Vs. Office 365: Which Suite Reigns Supreme?
Google Apps Vs. Office 365: Which Suite Reigns Supreme?
(Click image for larger view and slideshow.)

Microsoft has announced the "reimagining" of Microsoft Ventures to focus on investing in early-stage startups. The idea behind its approach is to fund young companies that align with products in technology sectors like cloud, security, and machine learning.

While Redmond has a history of supporting startups, it hasn't done much in the way of early-stage investment. Most of its funding has been wrapped up with larger deals and didn't give the company a chance to work with companies at the forefront of cutting-edge trends.

"Because we would often invest alongside commercial deals, we were not a part of the early industry conversations on disruptive technology trends," wrote Nagraj Kashyap, corporate vice president of Microsoft Ventures, in a May 30 blog post on the news. "With a formalized venture fund, Microsoft now has a seat at the table."

[The future of Microsoft mobile: What comes next?]

Microsoft Ventures was previously the name of a startup accelerator group within Microsoft's Developer Evangelism team. This division has been repurposed as Microsoft Accelerator and meant to help early-stage companies grow.

Microsoft Accelerator stands at one end of the company's investment spectrum, Kashyap explained. Its larger investments and acquisitions stand at the other end. The new Microsoft Ventures "fills a gap we've had somewhere in the middle of that range," he wrote.

The revamped division, which consists of a small team, will identify new market trends and help young businesses with financial and technical resources.

Its focus will be on startups that complement Microsoft's transition to the cloud. That focus includes companies developing products and services that align with the Azure infrastructure and are creating business SaaS apps, enhancing the Windows and HoloLens ecosystems, and building enterprise, productivity, and communication products around Office 365.

In addition, he noted, Microsoft Ventures will also keep a close eye on companies working on machine learning and security.

Kashyap, who formerly led Qualcomm Ventures, joined Microsoft in January. His hiring was a sign Microsoft was ready to boost its venture investment strategy, explained Pund-IT principal analyst Charles King, noting there are good tactical reasons for doing so.

Over the past few months, venture capital activity in tech has taken a dramatic tumble, because many start-ups, including many "unicorn" businesses, have failed to succeed. Few unicorns, which are startups given a value of more than $1 billion, have found clear paths to profitability.

(Image: Nicolas McComber/iStockphoto)

(Image: Nicolas McComber/iStockphoto)

"As a result, investors are moving more cautiously, making funding harder to fund," King explained. "Microsoft has the wherewithal to make a real difference, and to better maximize on its investments."

He likened the move to avoiding real estate in hot housing markets. Those who wait until things calm down and eager buyers move elsewhere, will have a better chance of finding good deals and opportunities.

Microsoft is also trying to keep up with competitors in its venture projects. Its approach to investing is different from those of competitors and partners who have focused on early-stage companies. At this point, Microsoft likely thinks its experience and resources are not giving it the success it should have.

The creation of Microsoft Ventures also appears "clearly linked" to the rise of Satya Nadella as CEO.

"It isn't what you'd call a huge step forward, but I expect that fixing the company's VC efforts has been relatively high on Nadella's to-do list," said King.

Microsoft Ventures will start with a presence in the San Francisco Bay Area, New York, and Tel Aviv. Its goal is to expand to cover other geographies in coming years.

Kelly Sheridan is the Staff Editor at Dark Reading, where she focuses on cybersecurity news and analysis. She is a business technology journalist who previously reported for InformationWeek, where she covered Microsoft, and Insurance & Technology, where she covered financial ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
2018 State of the Cloud
2018 State of the Cloud
Cloud adoption is growing, but how are organizations taking advantage of it? Interop ITX and InformationWeek surveyed technology decision-makers to find out, read this report to discover what they had to say!
Register for InformationWeek Newsletters
Video
Current Issue
The Next Generation of IT Support
The workforce is changing as businesses become global and technology erodes geographical and physical barriers.IT organizations are critical to enabling this transition and can utilize next-generation tools and strategies to provide world-class support regardless of location, platform or device
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll