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Microsoft's investing arm is back on the market, but will entrepreneurs bite?

After laying dormant for quite some time, Microsoft has announced that it is getting back into directly investing in startups. Microsoft Ventures has been overhauled, though it’s not clear why Microsoft has decided to get back into investing — or if the company is in it for the long haul.

Nagraj Kashyap, the corporate vice president of Microsoft Ventures, laid out his vision for the investing arm in a blog post Monday, saying that the fund will be used to support early-stage companies and help Microsoft be more involved in new technology developments.

Microsoft’s existing series of startup accelerators, and its BizSpark program to offer discounts on software, will be rolled into a new Microsoft Accelerator organization. For larger business partnerships and acquisitions, Microsoft will rely on a different team. This version of Ventures is supposed to fill in a gap Microsoft left open when it stopped directly investing in companies.

Kashyap said that Microsoft is interested in a wide variety of technologies, especially cutting-edge companies focused on complementing and accelerating the global transition toward using the cloud.

"Companies developing product and services that complement Azure infrastructure, building new business SaaS applications, promoting more personal computing by enriching the Windows and HoloLens ecosystems, new disruptive enterprise, consumer productivity, and communication products around Office 365 are interesting areas from an investment perspective," Kashyap said.

Kashyap’s pitch isn’t the first time that the company has tried to be a part of the investing ecosystem. That started in 2012 with the launch of the Bing Fund, an investment fund aimed at getting developers to use special tools from Microsoft’s search engine.

In 2013, that morphed into Microsoft Ventures, which included a venture investing arm, along with the company initiatives that are being rolled into the Microsoft Accelerators.

One of the risks of taking money from Microsoft is that the company may still decide to compete with a startup that it invests in. Take the case of SkyGiraffe, a company that makes tools to enable everyday employees to build mobile apps using company data. It’s currently facing competition from Microsoft’s PowerApps product, despite being the first investment from Microsoft Ventures when it was introduced in 2013.

SkyGiraffe CEO Boaz Hecht said that he’s happy to see Microsoft get back into investing, but that he doesn’t expect to work together with the Ventures arm at the moment.

"Our paths may cross with them again in the future given the core technologies we are both focusing on, but at this point we see them more as a competitor than a partner," Hecht said in an email.

Microsoft is far from the only tech giant with an investing arm. Kashyap himself came to Microsoft Ventures after spending 12 years at Qualcomm Ventures. Google parent company Alphabet has both GV and Google Capital under its purview, while Intel, Salesforce, and others also offer funding to investors.

Right now, the company hasn’t funded any firms as part of the new Microsoft Ventures push, but Kashyap’s blog post would seem to indicate that there’s at least more news coming from Microsoft Ventures in the near future.

IDG Insider

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