Microsoft’s venture arm M12 invests in a wide range of startups around the globe. A recent piece by Crunchbase gives unique insight into the firm. The fund was founded In 2016 and has evolved and grown steadily since its launch.
While Microsoft has a history of investing in companies to improve its strategic position within the industry, that’s not the motivation behind M12. “We are financially focused, not strategic in that sense,” said Priyanka Mitra to Cruchbase. Mitra invests in SaaS, infrastructure, and health care IT for M12.
In fact, there are instances in which M12 has to be careful not to invest in startups that are too close to Microsoft.
“It’s a fine line we have to walk,” said Samir Kumar, M12’s managing director investing in artificial intelligence/machine learning and deep tech to Cruchbase. “You don’t want to be on a collision course to compete with Microsoft.”
While M12 invests in companies, it does not take board seats on the organizations it invests in. It also stopped having “right of first” terms with companies a few years ago. These terms are commonplace with investment firms and give an investor the right to purchase a startup before anyone else if it goes up for sale.
The frequency and value of M12’s investments have grown steadily over the last five years. According to Cruchbase data, M12 made 15 investments in 2016. In 2020, the venture arm made 55 investments. It’s already on pace to beat last year, having made 39 investments so far in 2021.
A similar growth pattern appears when looking at the dollar amounts of M12’s investments. During its first three years, M12 made investments up to $10 million. Over time, that amount rose to $20 million. The number of funding rounds has also increased over the years. Last year M12 led 13 rounds, the highest it’s ever had in a year.
Because M12 has the financial backing of Microsoft, its leaders can focus on investment in a way that other venture arms can’t. M12’s Tamara Steffens says that the firm can put “Microsoft muscle” behind the startups it invests in.
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