Microsoft’s Bing Fund Makes First Investments: Buddy and Pinion

8/9/12Follow @curtwoodward

The Bing Fund, a new angel investment arm of Microsoft, has announced its first two deals: Mobile developer service Buddy and video-game advertising startup Pinion.

Bing Fund general manager Rahul Sood didn’t disclose the size of the investments in his blog post, and declined to offer more details on that front in a follow-up e-mail exchange. But he has previously said that the Bing Fund is investing in companies with convertible notes (loans that can later convert to stock) of $50,000-$100,000.

The Seattle region is also gaining a new startup as part of the financing. Sood tells me that Pinion moved from Australia to Bellevue about two weeks ago, working full-time out of the Bing Fund’s office space. Companies aren’t required to move into that incubator office, but they do have to be U.S.-based to get an investment from the Bing Fund. Buddy, which previously raised $1 million, remains headquartered in Kirkland.

In his blog post announcing the deals, Sood says he met the two startups through industry contacts. The roots of the two companies are emblematic of his recent history, which includes stints at Microsoft and Hewlett-Packard, which bought his gaming-focused computer company VoodooPC in 2006.

Buddy is headed by former microsofties David McLauchlan and Jeff MacDuff. The startup provides back-end software services for mobile app developers, allowing them to plug an app into crucial online services—maps or purchasing systems, for example. That can be a major plus for your garden-variety app developer who has the software skills to build the consumer-facing part but doesn’t know the completely different world of server-side code.

Buddy also offers analytics for app publishers that help them track things like the location and demographics of their users. Both parts of Buddy’s offering will get a big boost from working with the Bing Fund, CEO McLauchlan says, because the program offers special access to Microsoft technology assets, including subsidized use of data services from Bing.

“We’ll be able to offer features for our customers that we absolutely could not have previously,” McLauchlan says. Buddy currently employs five people, and is hiring.

Pinion’s take on digital advertising is focused on the people who run gaming communities, the groups of gamers who play together online. Running those communities can mean a lot of back-end IT work and cost—necessities that Pinion says it can help pay for by serving video ads to the players.

“The ads don’t annoy gamers because they don’t invade the gaming experience, plus the ads are relevant to them,” Sood writes. “Xbox, Adidas, Domino’s, Budweiser: all tools of the gaming experience.”

Sood also says the Pinion team has an interesting backstory: “Three times they have almost gone broke, and three times they have come back. Now their business is starting to take off.” I couldn’t reach anybody at the company right away to get more detail about the Bing Fund investment from their perspective.

It’ll be very interesting to see where the Bing Fund goes for its next investments. Sood writes that he’s been inundated with requests and pitches since opening the doors for the program, which plans to take fewer than a dozen startups at any one time. But Sood hints that the Bing Fund has “identified some great companies in San Francisco and Boulder.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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