Microsoft's Revamped Ventures Division Will Focus On Startups - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

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
Slideshows
Top-Paying U.S. Cities for Data Scientists and Data Analysts
Cynthia Harvey, Freelance Journalist, InformationWeek,  11/5/2019
Slideshows
10 Strategic Technology Trends for 2020
Jessica Davis, Senior Editor, Enterprise Apps,  11/1/2019
Commentary
Study Proposes 5 Primary Traits of Innovation Leaders
Joao-Pierre S. Ruth, Senior Writer,  11/8/2019
White Papers
Register for InformationWeek Newsletters
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Video
Current Issue
Getting Started With Emerging Technologies
Looking to help your enterprise IT team ease the stress of putting new/emerging technologies such as AI, machine learning and IoT to work for their organizations? There are a few ways to get off on the right foot. In this report we share some expert advice on how to approach some of these seemingly daunting tech challenges.
Slideshows
Flash Poll