Microsoft Venture Fund Aims to Harness Early Stage Innovation

Microsoft plans to invest more in early stage startup companies through a new corporate venture fund, headed by former Qualcomm executives.

The name of the fund—which will back startups focused on cloud computing, machine learning, and security, with an emphasis on technology that complements Microsoft’s own products and services—is Microsoft Ventures. If that sounds familiar, it’s because the Redmond, WA, technology giant combined several of its startup-focused projects—including an earlier investment vehicle, the Bing Fund—under that name in 2013.

The new Microsoft Ventures will seek investments that fall outside the commercial deals that the company has done more frequently in the past, writes Nagraj Kashyap, corporate vice president of Microsoft Ventures, in a blog post announcing the new effort.

The company’s startup accelerator program—henceforth to be known as Microsoft Accelerator—will continue hosting startups. That forms one end of the company’s spectrum of startup activities.

Peggy Johnson

Peggy Johnson

“And at the other end is where you’ll typically see our larger investments and acquisitions,” Kashyap writes. “Microsoft Ventures now fills a gap we’ve had somewhere in the middle of that range.”

Microsoft’s business development efforts are headed by executive vice president Peggy Johnson, who joined the company in 2014 after 24 years at Qualcomm.

Microsoft aims to get in front of technology trends earlier with the new investment vehicle.

“Because we would often invest alongside commercial deals, we were not a part of the early industry conversations on disruptive technology trends,” writes Kashyap, who joined Microsoft earlier this year after more than a decade leading Qualcomm’s corporate venture arm. “With a formalized venture fund, Microsoft now has a seat at the table. Going forward, this will help us identify and harness those trends as early as possible.”

In addition to capital, Microsoft Ventures will offer startups technical and marketing help.

The fund will have a presence in Seattle, the San Francisco Bay Area, New York City, and Tel Aviv, Israel, with plans to expand further.

Nagraj Kashyap

Nagraj Kashyap (photo courtesy of Qualcomm)

Microsoft did not outline a specific pace of investments to be made from the fund, or its size. Kashyap promises “steady activity over the course of the year” in companies building complements to Microsoft’s public cloud, Azure; the Windows and HoloLens ecosystems; and productivity and communication technologies linked to Office 365.

“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,” Kashyap writes.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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