What Microsoft Stands to Gain from Start-Ups

Only the wearer knows where the shoe pinches. When Bill Gates and Paul Allen founded Microsoft in 1975, the young entrepreneurs encountered challenges akin to any start-up founder. At a time when few hobbyists operated personal computers (PC) and even fewer believed in paying for software, the duo was adamant about commercialising Microsoft software, an unthinkable venture back then.

As sales at the fledgling tech start-up were irregular and the founders wanted to run a tight ship without overspending, Gates left his studies at Harvard to focus on Microsoft. As their business grew, so did competition from players like Apple and IBM. Gates would promote Microsoft’s software over that of its peers at every opportunity he got and finally bagged an order from IBM to develop software for the tech major’s PC.

Since then, Microsoft has kept ascending the corporate rungs to become a name to reckon with in the tech stratosphere. Today, Gates is ranked fourth on the Bloomberg Billionaires Index, commanding a net worth of $115 billion.

Start-Ups in the Wings

Seeing how its founder had traversed the precarious twists and turns of the start-up sector, Microsoft decided to reclaim this legacy and ease matters for other innovators, many of whom it continually engaged with. In 2016, it introduced Microsoft Ventures, later renamed M12, to help early-stage companies leverage Microsoft’s financial, technical and go-to-market (GTM) resources.

Five years later, it launched the Microsoft for Startups Founders Hub (MSFH) under the larger Microsoft for Startups programme to allow start-ups to access Microsoft 365 services and other tech tools, gain the chance for mentorships from the company’s pool of internal experts and get credits to use services like Azure. In May 2023, Microsoft for Startups expanded its existing Pegasus Program to give start-ups a chance to engage with, and win the business of, enterprise customers.

Throughout this journey, the company took a leaf out of Gates’ life to understand the light-touch approach it should take to augment its product and technology efforts while placing strategic and financial bets with early-stage companies. Understandably, the action for Microsoft and the start-ups it wants to ally with has shifted to the cloud.

Sangeeta Bavi, executive director, digital natives, at Microsoft, says that almost every contemporary start-up has its processes and systems on the cloud and her company wants to provide free access to the Azure cloud to these entities. It decided to give around $1,200 to $2,50,000 worth of tech credits, along with tools for collaboration, security and productivity for free to up to 5,000 start-ups it currently works with.

“An early-stage start-up takes six to 24 months to hit the minimum viable product (MVP) stage before progressing to the product market fit (PMF) phase. Two years of tech credits can help them while they hit this scale and start generating revenue, as they do not have to pay money out of their pocket or dip into their seed investments,” Bavi explains.

Ketki Agarwal, founder of Ldexplained.org, a learning support start-up in the parent-tech category, who has been associated with the MSFH since 2022, says that its resources, including Azure Cloud Credits, GitHub Enterprise subscriptions, LinkedIn Products, Microsoft 365, Microsoft Clarity, etc., are start-up friendly. She feels that Azure Cloud Credits enable entrepreneurs like her to build products at their own pace, while GitHub Enterprise subscriptions provide up to 20 seats for a one-year subscription.

Similarly, start-ups get ten seats for Microsoft 365 for one year. Some LinkedIn products that offer tools for talent recruitment, lead generation and networking are also available to them.

“Moreover, the MSFH provides self-guided learning paths and personalised training content to help us expand our skills and knowledge. To me, initiatives like the MSFH level the playing field by providing founders with essential resources, support and access to industry-leading tools and expertise. By removing barriers and providing tailored benefits at every stage of the start-up journey, the MSFH empowers founders to focus on building their products, accelerating growth and increasing their chances of success,” Agarwal says.

Picking the Trendsetters

Being on the external cloud for most early- and mid-stage start-ups has become a necessity since it cuts their operational costs and gives them the flexibility to manage their technology resources as they scale their business. The latter factor goes in favour of the association between Microsoft and start-ups.

Sun Mobility, a start-up that provides infrastructure and services to electric vehicles, has been part of the MSFH since 2018. Its co-founder and chairman Chetan Maini claims that this association has helped his company to focus on establishing an initial solution rather than worry about the cloud costs.

The technical and architecture advisory sessions helped Sun Mobility establish initial baseline architecture with support from Microsoft’s product and engineering teams. Maini says, “We received round-the-clock support from the team, which helped us overcome development and production issues. The service also helped speed up developer productivity, and the access to experts and guidance, plus Microsoft Technology Centers sessions, helped ensure that we had the best-of-the-class advisory.” In addition, as an early start-up, he states, having free Azure cloud credits for two years and GitHub initial credits enabled his company to handle the initial cloud cost within reasonable limits.

A candidate assessment company iMocha has benefitted greatly from the association with Microsoft. Its co-founder and CTO Sujit Karpe says, “The Microsoft team helped us host events for our customers and prospective clients in Microsoft offices in Mumbai, Bengaluru, Gurgaon, Dubai and New York, building tremendous credibility for us in front of them customers/prospects.” His company wondirect appreciation from Microsoft CEO Satya Nadella at the Resurgence: TiEcon Delhi-NCR 2021 conference.

Money Talks

While scaling up and exploring every possible avenue to maximise their success, start-ups need more than just technical and GTM resources: they need capital to help them leap into the big league. While M12 invests in select start-ups, Bavi claims that the company did a rethink five years ago for the MSFH on how to make start-ups a part of regular sales activities of Microsoft.

Devroop Dhar, the co-founder of management consulting firm Primus Partners, feels that initiatives like the MSFH can be an important way to empower founders by providing access to tools and infrastructure, partners, experts and mentors. “They can potentially have the same access to tools, technologies, infrastructure and experts as any other organisation, which can come in handy for start-ups at the initial phase. Many other large tech companies have similar programs—for example, Google for Start-ups, AWS Activate and IBM Global Entrepreneur—to nurture and support start-ups, and all of it augurs well for the start-up ecosystem,” he says.

A Level-Playing Field

The MSFH has partnered with F6S, a global platform that connects start-ups with investors, accelerators and other resources. F6S provides a suite of services, catering to various start-up needs, such as funding opportunities, mentorship programmes, with a network of investors and fellow entrepreneurs.

“While I am currently in the early stages of my venture, I have not yet secured any investment deals. Also, I am not actively seeking funds at this moment, as I am focused on laying a solid foundation for my start-up. However, I am excited about the potential opportunities ahead with F6S and Microsoft for Startups,” Agarwal says enthusiastically.

The MSFH is helping Microsoft position its products in the market through start-ups, as many of them are coming up with products and solutions with long-term viability and impact. For the tech giant, this ensures that start-ups have built their products and solutions on
its technology.

The MSFH grants Microsoft access to a diverse pool of potential customers. Since the programme collaborates with start-ups which work with businesses of all sizes, it allows the company to reach a wide range of potential customers with its products and services.

In today’s era of technological and brand neutrality, it is crucial for Microsoft to have a platform in its stable that can effectively help it reach emerging drivers of the global economy, start-ups being one such sector. The MSFH becomes a valuable platform for Microsoft due to its broad reach, industry expertise and established relationships that are crucial for Microsoft’s success. However, it is important to note that start-ups may not necessarily prefer working exclusively with tech companies that primarily promote their own solutions. Start-ups often seek partners who can assist them in growing their businesses and accessing their target markets. Microsoft’s challenge, then, lies in the fact that the start-ups it grooms through platforms like the MSFH stay with it even as they acquire customers and attract funds for exponential expansion.