Does Microsoft invest in start-ups, partner with companies, or acquire companies? How does Microsoft decide which companies to invest in, partner with, or acquire? How do I get Microsoft's attention? These are common questions from VC's and entrepreneurs. I asked them myself when I was working in the start-up world.
Dan'l Lewin, Microsoft Corporate VP, and leader of the Emerging Business Team wrote a guest article in Always On that explained perfectly how Microsoft works with VC's and the ISV partner ecosystem. You should read the whole article, but here is an excerpt;
We are heavily investing in start-ups. We’re open for business and care passionately about entrepreneurs and their commitment to changing the world. In fact, during the last three or four years, we’ve had hundreds of extremely successful engagements helping start-ups drive their shareholder and end customer value. The reality and leverage of the Microsoft partner ecosystem is amazing—96% of Microsoft’s revenue is driven through our partners, and for every $1 of our revenue, our partners make $7 to $8. We know venture-backed start-ups are fundamental to Microsoft’s long-term success.
As the article points out, Microsoft does not directly invest in start-ups anymore. Microsoft does invest in people and resources to support the partner ecosystem. My full time job, and that of the entire Emerging Business Team, is to help start-ups build a successful partnership with Microsoft and deliver great products to our customers. Cliff Reeves and Sam Ramji two colleagues in (EBT) who also post frequently to their blogs. This is a great way to connect directly with people at Microsoft.
Microsoft decided it is much more productive to invest in helping all partners be successful, than to make direct equity investments in a few partners. I believe the reasons for this are; 1) Microsoft doesn't want to compete with VC's for deals, 2) Microsoft wants a large partner ecosystem and when you invest in one company in a space, where does that leave the rest of the companies?, 3) Equity investing is much harder than it looks, 4) Even when Microsoft makes a successful investment, cashing out of the investment sends the wrong signals to the investment community and could end up hurting the partner.
So, Microsoft invests in supporting partners. OK, so how do I get Microsoft's attention? Microsoft is a huge company with lots of programs for partners. The first step is to sign up as a Microsoft partner here. There is a special partner program for ISV start-ups called Empower that includes thousands of dollars of software, MSDN subscriptions, support and 10 hours of consulting. It is a great deal.
After joining the Microsoft Partner Program there are many programs to choose from and many paths to success. If you are an ISV start-up in the development stage, or in the early years of selling your product, the Emerging Business Team might be a good place to start. Read about some of our success stories with many different companies in different market segments.
The Microsoft partner team has a big organization with people located across the country and around the world to help partners be successful. Join the partner program and get plugged in.
Microsoft acquisitions is a subject unto itself. I will write a future column about Microsoft's past acquisitions, some of the thinking behind the decisions, how the process works, and who makes it happen.