Microsoft launches new venture arm
In the continued trend of corporate venture fund establishment, Microsoft has announced the launch of its own venture arm, Microsoft Ventures, that will provide startup funding to early-stage startups focused on cloud-based technology. Microsoft Corporate Vice President Nagraj Kashyap wrote in a blog post announcing the launch of the venture arm that it also seeks to invest in companies whose products and services work well with Microsoft's Azure infrastructure, promote personal computing through enriching HoloLens and Windows ecosystems and focus on consumer productivity.
The name of the arm has caused a bit of confusion. Fortune explained that prior to this announcement, Microsoft Ventures was already the name of a different segment of the company that backed accelerator programs. That program's name has been changed to Microsoft Accelerator.
Why Microsoft decided to launch a venture arm
Accelerator provides consulting and software services, and Kashyap explained that Microsoft Ventures is a middle ground between that program and its larger investments and acquisitions. Microsoft wants to be a part of developing and harnessing trends early on so it can best take advantage of them.
"In Microsoft's history of engaging with and supporting start-ups, we've done a lot of investing, but not a lot of early stage," Kashyap wrote. "Because we would often invest alongside commercial deals, we were not a part of the early industry conversations on disruptive technology trends. With a formalized venture fund, Microsoft now has a seat at the table."
One of those larger-scale investments Microsoft once took part in was Facebook. Engadget said in 2007 Microsoft invested $250 million in the social media venture, though the investment was in preferred stock and the goal was to gain ad sales rather than to play an active role in growing the company.
Business2Community said Microsoft Ventures could be a great opportunity for young entrepreneurs to create a product that is wholly supported by Microsoft. In addition, more established startups can take advantage of the venture arm to incorporate Microsoft support into their product. InfoWorld, however, said startups should think hard about accepting funding from a company that may also be their competition.
The venture arm will begin with a presence in Seattle, New York City, the San Francisco Bay Area and Tel Aviv. It was created by Kashyap in partnership with Peggy Johnson, Microsoft's executive vice president of business development.
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