Microsoft

Microsoft Ventures New Investment Philosophy

Microsoft Ventures New Investment Philosophy
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In January 2016, Microsoft's venture capital arm got a new boss in the form of Qualcomm veteran Nagraj Kashyap.

In a new blog post, Kashyap lays out the changes coming to Microsoft Ventures -- namely, that it'll be focusing a lot more on early-stage startups -- and explains the tech titan's overall investment philosophy. 

Here's the short version: Microsoft is looking for startups that can boost its most important products, including Windows, Office 365, the Azure cloud computing platform, and even the futuristic HoloLens holographic goggles.

The important part, from the blog post:

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.

In other words, Microsoft is willing to financially support companies that are building awesome apps for HoloLens, or that are creating tools for the Azure cloud that help developers make and market their software. Those startups are creating products that would then boost sales and usage of Microsoft's platforms.

Kashyap writes that he's working with Peggy Johnson, Microsoft's head of business development, on Microsoft's venture efforts. We're already seeing a hint of what this might mean for the future. 

When Microsoft was building the Azure Container Service, a tool that helps Azure customers use the mega-hot software container technology, it turned to billion-dollar startups Docker and Mesosphere to actually power the product. Not coincidentally, Microsoft invested millions in Mesosphere's latest funding round.

If this trend continues, we could see Microsoft slow down its industry-leading acquisition spree, instead choosing to partner with startups wherever it makes sense. It's cheaper than buying a company outright, and would leave the startup free to do what they do best.

"As with the rest of the Business Development team at Microsoft, 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," writes Kashyap.


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