Through venture capital, many small startup tech businesses have been able to obtain the necessary funds to start their business. The success of these startups provides investors with not only an opportunity to profit on the new organization’s success, but also allows many large corporations to invest in startups as a means to spread their hardware and expand their business. Consequently, venture capital investment provides large corporations with the opportunity to utilize these entrepreneurs as a means to not only profit on investment, but also to see the parent company grow. Because of the chance to both enhance profits and expand their business, many large corporations have embarked on venture capital opportunities as a means to expand on their market share. Furthermore, in an increasingly competitive technology market, embarking on venture capital opportunities allows corporations to spread their hardware to startups. With these benefits in mind, Microsoft’s launch of Microsoft Ventures will provide Microsoft with benefits beyond return on investment.
Microsoft Ventures, launched in 2013, was founded with the purpose of providing the tools, guidance, and financial assistance necessary to developing startups.1 This program is divided into three different programs.2 The first component of the program, Microsoft Ventures Community, focuses on entrepreneurs that are just starting out.3 This component includes BizSpark, which provides “[t]hree years of free software, support, and visibility for startups.”4 If an organization already has a strong set of established ideas, Microsoft Ventures Accelerators, the second component, provides a full-fledged acceleration program providing entrepreneurs with three to six months to develop their ideas in eight different global locations.5 The last component is the “Bing Fund,” which provides direct funding to those entrepreneurs “focused on enterprise software, big data, security, artificial intelligence, advertising, gaming, and cloud services.”6
The overarching program of Microsoft Ventures serves to benefit multiple parties. On one hand, startups are provided with the funding necessary to successfully launch their business. However, Microsoft serves to gain dramatically from this program as well. Indeed, through Microsoft Ventures startups are able to gain access to Microsoft in a manner that is as “intuitive and friction-free as possible.”7 This easy access will help allow the spread of Microsoft products in the startup world. Given that many entrepreneurs in the technology market code on Apple hardware, the establishment of Microsoft Ventures provides Microsoft with the opportunity to infiltrate this arena with Microsoft products.8
Furthermore, through this investment, Microsoft has the opportunity to absorb the startups they helped found and utilize their services as a means to expand their business. Prior to the launch of Microsoft Ventures, Microsoft made use of the Windows Azure program to assist startups.9 For example, in early 2013 Microsoft utilized the Azure program to purchase MetricsHub, which was a graduate of the Azure program.10 This program took only two months to be acquired by Microsoft and was the first program to be acquired after graduating through Azure.11 Consequently, as result of Microsoft’s venture, MetricsHub was able to fully launch and Microsoft was able to benefit financially and expand their business through the company’s acquisition of MetricsHub.
Venture capital provides investors with the chance of capital gain. However, for those established corporations that choose to invest in startups, the gain goes beyond returns on investment. Microsoft Ventures is a perfect example of this. On one hand, Microsoft is able to utilize Microsoft Ventures as a means to seed Microsoft hardware at a time when startups are much more likely to use Apple products.12 Furthermore, Microsoft Ventures will provide Microsoft with the opportunity to expand its business through the absorption of these startups. Microsoft Venture’s predecessor, Microsoft Windows Azure, already provided Microsoft with the opportunity to expand the company’s business through the acquisition of MetricsHub.13 These opportunities will only increase as Microsoft Ventures further expands. With these benefits taken into account, Microsoft Ventures will benefit Microsoft not only through return on investment, but also through the spread of Microsoft hardware and the expansion of Microsoft’s business.
Press Release, Wall St. J., Microsoft Ventures Accelerator Beijing Demo Day: Creating Great Businesses at Breakneck Pace for Startups (July 8, 2013, 10:05 AM), available at http://online.wsj.com/article/PR-CO-20130708-905185.html. ↩
Casey Newton, Microsoft Ventures Launches to Lure Founders Away from their MacBooks, The Verge (June 25, 2013, 1:11 PM), http://www.theverge.com/2013/6/25/4463044/microsoft-unifies-incubator-strategy-under-voodoopc-founder-rahul-sood, hereinafter Newton. ↩
Microsoft, http://www.microsoft.com/bizspark/about/ (last visited Sept. 13, 2013, 3:23 PM). ↩
Newton, supra note 1. ↩
Rahul Sood, Announcing Microsoft Ventures for Startups to Build, Innovate and Grow, The Official Microsoft Blog (June 25, 2013, 9:00 AM), http://blogs.technet.com/b/microsoft_blog/archive/2013/06/25/announcing-microsoft-ventures-for-startups-to-build-innovate-and-grow.aspx. ↩
Newton, supra note 1. ↩
John Cook, Microsoft Acquires Cloud Startup MetricsHub, Taking Hatchling Under its Wing, GeekWire (Mar. 4, 2013, 8:04 PM) http://www.geekwire.com/2013/microsoft-gobbles-hatchling-acquires-cloud-monitoring-startup-metricshub/, hereinafter Cook. ↩
Newton, supra note 1. ↩
Cook, supra note 9. ↩
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