Microsoft has announced the launch of Microsoft Ventures, a new capitalist venture arm to engage start-ups and entrepreneurs in areas which the business does not currently operate.
Speaking on the official Microsoft blog, Nagraj Kashyap Corporate VP for the ventures business, highlighted the launch was in line with objectives to identify start-ups which can inspire the next technology evolution, as opposed to supporting the current portfolio and business objectives.
“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,” said Kashyap. “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.”
Technology acquisition has become an intense game in recent months, as a host of tech giants have built new business units to identify potential acquisitions. While this might not be considered an unusual business activity, the trends of innovation through acquisition as opposed to organic growth have seemingly becoming more prominent. Earlier this month, HP announced the launch of its own VC business unit, which could be perceived as a means for the business to diversify its portfolio, entering new markets. These new markets could lead to direct competition with HPE.
Microsoft has a history of creating initiatives to aide and invest in start-ups, having launched the Microsoft Accelerator program, which provides tools, technology and consulting, though this unit will aim to sit between the Accelerator and the function which oversees major acquisitions. Initially the team will have a presence in San Francisco New York City and Tel Aviv, and will also look to expand to additional countries in the future.
“Given that the move to the cloud remains the single largest priority for the industry, identifying the bleeding-edge companies who complement and leverage the transition to the cloud is key to our investment thesis,” said Kashyap.
“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.”
Aside from technologies which can aide the company’s core capabilities, the team will also be responsible for investigating disruptions in more horizontal axis. Security and machine learning were two areas which were identified by Kashyap on the blog. “Our view is outward into the market — we focus on the inorganic growth of Microsoft, looking at where we can provide a step function, versus incremental progress.”
