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Microsoft is changing how it invests in startups and has a new leader to help
(Triple Helix Venturing)
Microsoft Ventures boss Nagraj Kashyap.
Microsoft has launched a new strategic investment fund under the Microsoft Ventures name, and may consolidate its previous startup-investment programs underneath this new program.
To make this happen, Microsoft Ventures has a new boss, as first reported by Fortune earlier on Monday: Nagraj Kashyap, the former head of Qualcomm Ventures.
What's changing?
In recent years, Microsoft has created several programs that invest in startups, including BizSpark, Microsoft Reactor, and the Bing Fund. The goal of these programs has been primarily to get startups excited about and using technology from Microsoft, like its Azure cloud-computing platform, and to improve Microsoft's relationships with venture capitalists. They have been run out of the company's developer-evangelism group, which was recently revamped.
In 2013, some of these programs were consolidated under the Microsoft Ventures name.
At the same time, Microsoft has long made strategic investments into young companies that fit into its goals. Its 2006 investment in Facebook, which gave the young company a then-shocking $15 billion valuation, is a prime example. These investments are run out of the corporate business-development group led by former Qualcomm executive Peggy Johnson.
Business Insider has learned that Kashyap's group will take over the Microsoft Ventures name, and he will be part of Johnson's team. The other programs will rebrand and work more closely with Kashyap.
The new Microsoft Ventures won't be an independent VC fund with a single limited partner, as Google runs with GV — formerly known as Google Ventures. Rather, it will be a strategic investment fund controlled by Microsoft.
New blood
On the surface, Kashyap is a nonobvious fit to lead a Microsoft fund.
Qualcomm is a chip manufacturer, primarily selling its powerful mobile processors to smartphone manufacturers around the world. Microsoft is best known as a software company, with a mandate to help people "achieve more."
There's a little more to this, though.
A lot of Qualcomm Ventures' money went into startups like depth-sensing camera firm Mantis Vision or flying drone company 3D Robotics. That is to say, a major investment area for Qualcomm Ventures was in hardware companies building new kinds of things that would need Qualcomm chips, beyond just phone handsets.
(Business Insider)
A Qualcomm Snapdragon-powered phone, demonstrating its ultrasonic-based fingerprint sensor.
But Qualcomm also sank some cash into startups like social-driving startup Waze, which got snapped up by Google in 2013. It's also invested in an eclectic mix of other startups, including India-based doctor-on-demand startup Portea Medical, gift card exchange Zeek, and business-focused translation service Reverie.
Kashyap laid out his investment thesis in a 2014 interview:
Qualcomm is a leading R&D supplier for the wireless industry, but many of us believed that we were not as connected as we could be to the end user of the services. QV was founded in 2000 to address this concern. While Qualcomm continues to focus on the primary customers, handset makers, QV enables the company to tap into the end user, as well as trends in the mobile technology industry.
So, while Microsoft and Qualcomm are in different businesses, it sounds like Kashyap understands the importance of keeping tabs on changes in the all-important mobile market, even if the benefits aren't immediately obvious.
Plus, both Microsoft and Qualcomm have invested in the hot startup CloudFlare, which helps websites run faster on every device, so there's some obvious overlap. It was a Series D investment — a little later-stage than most of Microsoft's usual seed investments.
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