Microsoft, American Family Insurance Launch Startup Accelerator

6/17/14Follow @XconomyWI

Microsoft announced a new startup accelerator today that will be housed at its headquarters outside Seattle and focused on companies innovating in home automation.

Microsoft has formed a partnership with Madison, WI-based American Family Insurance, the nation’s eighth-largest provider of homeowners’ insurance (among other insurance products). Through its venture capital arm, American Family Ventures, the insurer will provide the program’s six to 10 startups with home industry expertise and connections, as well as an optional $25,000 equity investment. Microsoft won’t take any equity in the startups.

The new Microsoft Ventures Accelerator will run September through December at Microsoft’s Redmond, WA, campus. Microsoft’s venture capital arm currently runs startup accelerators in Bangalore, Beijing, Berlin, London, Paris, and Tel Aviv. (Microsoft has also partnered with Techstars to run an accelerator in Seattle focused on Kinect and Windows Azure.)

The new accelerator is slated to be announced today at the company’s Global Startup Day in San Francisco, an event recognizing startups from several of Microsoft’s programs around the globe.

“They have a good track record of getting companies funded and getting companies to exit,” said American Family Ventures’ managing director Dan Reed, who visited Microsoft’s accelerator in Israel. “We have some experience in the accelerator space through our work with Gener8tor in Madison and Milwaukee. The success that we’ve had with that relationship with Gener8tor really gives us the confidence to continue our growth into the accelerator space with this global partnership.”

American Family Ventures, a $50 million fund that started investing in 2010, has 13 companies in its portfolio, Reed said. Several of them are graduates of Wisconsin-based Gener8tor’s startup accelerator, including Chicago-based Review Trackers, which announced a $2 million Series A round today.

The corporate VC fund invests in companies tied to data analytics, innovative insurance-related products, and connected devices—including the kinds of smart technologies for homes that the new Microsoft accelerator will seek.

“Home automation is ripe for startup innovation,” said Steve Guggenheimer, corporate vice president of Microsoft’s developer and platform evangelism group, in a press release. “We are working closely with American Family Insurance to provide a one-of-a-kind experience for entrepreneurs in our accelerator. Startups accepted into the program will gain critical industry insight to build companies with the potential to have an enormous impact on our lives.”

Dan ReedMicrosoft and American Family began talking in October about teaming up on an accelerator, and they had a mutual interest in the connectivity theme, Reed (pictured left) said.

“The idea of a technology giant like them, and then our economic angle on connectivity and how our policyholders are asking us for new technologies…was the basis of an interesting concept,” Reed said.

American Family made its equity investment optional because “it allows companies that are a little bit farther along in their growth to still participate without having to be diluted more than they’d like,” Reed said. Whether they take the money or not, “really we just want to work with these companies,” he added.

Reed predicted American Family would make follow-on investments in some of the accelerator participants, and Microsoft might as well.

Jeff Engel is the editor of Xconomy Wisconsin. Email: jengel@xconomy.com Follow @XconomyWI

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