Software giant digs start-ups: an interview with Microsoft Ventures’ Rahul Sood

28 Jun 2013

Rahul Sood, general manager, Microsoft Ventures

Microsoft this week embarked on a new global strategy under the umbrella of Microsoft Ventures aimed at easing the path of technology start-ups by mentoring and guiding them to growth and will, where necessary, invest in start-ups. John Kennedy spoke to Microsoft Ventures general manager Rahul Sood to find out why Microsoft is consolidating its efforts in this area.

Sometimes it’s easy to forget that companies like Microsoft, Intel and Apple were all start-ups at one point. Intel has long been an investor in start-ups and emerging tech layers and Google has its ventures arm. However, little is heard of Microsoft Ventures, the Seattle software giant’s start-up wing, but that may be about to change.

Microsoft has been involved with start-ups for quite some time. The company is credited with being an early investor in Facebook and it was actually an early investor in Waze, which Google recently bought for US$1.3bn. Last year, Microsoft bought enterprise social network player Yammer for US$1.2bn.

But Microsoft’s engagement with start-ups goes much deeper and in fact it is an arbiter of many new emerging start-ups in a technological sense, not just financial.

Since 2008, more than 75,000 start-ups in more than 100 countries have accessed tools and resources via the BizSpark programme. An accelerator programme started two years ago saw 114 start-ups graduate and nearly all successfully raised a subsequent round of venture capital.

The Bing Fund was also launched in 2012 to make seed investments in start-ups.

Building a different kind of future for Microsoft

Microsoft Ventures

While Microsoft was communicating its brave new vision for computing at its Build conference in San Francisco, California, this week, Sood spoke at the Start San Francisco event organised by the creators of the Dublin Web Summit and F.ounders.

Sood told that Microsoft Ventures is a co-ordinated global effort that offers tools, resources and routes to market through mentorship, technology guidance, seed funding, joint selling opportunities and more.

“The most important thing to do to help start-ups is to ultimately help them find their customers and then they can build great businesses. BizSpark gave start-ups access to the cloud, in this case it is about building great partnerships and relationships.”

He said that while the main ethos of Microsoft Ventures will be to help businesses scale through guidance, investments are still an option.

“The only way we can make an investment is to look at how Microsoft can add value. If we like a business and its founders we will make the investment, put in the time and help them to grow through scalable technology decisions and great business decisions.”

Sood is a successful entrepreneur in his own right, having sold VoodooPC to HP in 2006 for an undisclosed sum. He said that in the past year, Microsoft has invested in a number of companies spanning the cloud services, hospitality, online gaming, social dating and digital-marketing sectors.

He said Microsoft will partner with venture capitalists on deals. “We don’t have a problem investing with other venture capitalists. This is not about the investment but it is very much about the partnership.

“It all depends on the business itself. We don’t always have to be investors because some start-ups will already have investors and won’t need the money, but we can help with partnerships that open up access to more customers,” Sood said.

At Build this week, a rejuvenated, more open and more focused Microsoft showed it was up to the challenge of what its competitors like to call the post-PC era with a preview of Windows 8.1, as well as a range of development tools, including Visual Studio 2013 and Azure Mobile Services. The tone and intent of Build 2013 was all about enabling entrepreneurs and the next generation of technology companies.

“This is about identifying interesting trends, working with entrepreneurs because they want to build a business and working with them to help them unlock their ideas and scale their businesses. It’s all about long-term relationships. I was an entrepreneur for 18 years and I had some successes and some failures, so I believe relationships matter.”

Sood said Microsoft Ventures pretty much is a consolidation of a lot of different efforts, such as the Bing Fund to provide greater clarity to the start-up community and respond better to opportunities.

“We’ve pulled it all together and into one organisation with a global remit,” Sood said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years