Microsoft is realigning its startup-oriented businesses and shifting the Microsoft Ventures name to a brand new venture capital fund, re-dubbing the original program Microsoft Accelerator. The new fund will take over old investments and focus on both Israel and North America, allowing the original program to double down on accelerating and incubating startups around the world.
“In Microsoft’s history of engaging with and supporting startups, we’ve done a lot of investing, but not a lot of early stage,” wrote Microsoft Ventures’ corporate vice president, 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.”
The announcement hints that the new Microsoft Ventures will fill a gap between seed stage company investments and major financing, implying that the new fund will focus on Series A and perhaps B and C. Microsoft Accelerator better names the program that has been dealing with consulting startups. The current Microsoft portfolio contains hundreds of SaaS companies.
That program already has a branch in Tel Aviv managed by Director Navot Volk. It is one of seven accelerators alongside branches in London, Berlin, Paris, Beijing, Bengaluru and Seattle. The Tel Aviv branch will start taking applications for Batch #9 on June 12 with that ninth class starting its program on September 18. Demo Day for Batch #8 is June 21.
Some of the Israeli companies that have gone through the program include EverCloud, Odemeda, Medisafe, Udobu and Woo (formerly Highr).
Kashyap noted, “There are often questions around corporate venture programs versus venture capital firms, and whether or not they are at odds or create disadvantages for entrepreneurs. In our case, we are driven by the desire to help early stage companies take advantage of Microsoft’s financial, technical and GTM resources.”
The fund will specifically focus on four metropolitan regions: Tel Aviv, New York, the San Francisco Bay Area and Seattle. Kashyap said the main focus for Microsoft in those investments would be doubling down on its Azure cloud infrastructure and other software companies that could help improve Microsoft’s respective suites of products.
This essentially splits Microsoft’s accelerator and investment arms. Microsoft last reported several venture investments in November and several “non-equity” allocations in February. It would seem that Microsoft slowed down a bit not having many investments going through the end of May, with this restructure explaining that lack of activity. But Kashyap hinted that a number of announcements could follow shortly, saying in the “days and weeks to come and beyond,” Microsoft would be listed as an investor in several places.
“In addition, and on a more horizontal axis, you should expect to see us invest in companies who are doing work in the areas for machine learning and security. We’re not aiming to hit a specific number of investments annually, but you should expect steady activity over the course of the year in the areas I outlined.”