Microsoft Ventures gives itself a new name as it reintroduces itself to enterprise startups — here's how it landed on 'M12' (MSFT)

microsoft ventures nagraj kashyap

Microsoft Ventures, the venture capital arm of Microsoft, will be called "M12" moving forward.
The "M" is for Microsoft, and the "12" comes from the dozen letters in the word "entrepreneur."
Otherwise, nothing is changing: M12 has invested in 50 startups in two years, with no plans to slow down.
The reason for the change: There was some confusion between a previous iteration of Microsoft Ventures and the current one. Microsoft sought a new name to make a clean break between old and new.

From this day forth, Microsoft Ventures — the two-year-old venture capital arm of the $710 billion tech titan — will be known by the much shorter name of M12.

As you might guess, the "M" is for Microsoft, said Nagraj Kashyap, the leader of Microsoft Ventures and now the newly rebranded M12, in an interview with Business Insider.

And the number? "'Entrepreneur' is a 12-letter word," said Kashyap.

Make no mistake, Kashyap said M12 is still the same organization as before. It's the same team of 20 or so, working from the same four offices worldwide, with the same portfolio of 50-plus startups, mostly in enterprise software and services.

And it's not because the team is trying to hide its association with Microsoft, either, Kashyap said — the name was chosen with the "M" front and center so there was no mistake about where M12 comes from, or that it's a part of Microsoft.

"We're not disassociating ourselves in any way," said Kashyap. "In fact, we are embracing it."

microsoft m12

It's more about the fact that the Microsoft Ventures name carries a certain degree of baggage, said Kashyap.

Let the past die

The first iteration of Microsoft Ventures, which started in 2013, was a catch-all name for all of Microsoft's startup accelerator and mentorship programs. While it was called Microsoft Ventures, there was very little actual venture capital investment going on, beyond a little bit of seed money from a handful of small-scale programs.

Then, in 2016, Kashyap himself came over from his job leading Qualcomm Ventures, the chipmaker's own venture capital arm. He was put in charge of an all-new Microsoft Ventures, structured more like a traditional Silicon Valley venture firm —and with a mandate to make larger investments in more mature startups.

The problem is that this got confusing for many Microsoft Ventures-backed companies, past and present: Companies that were backed under both the old Microsoft Ventures and the new all claimed to be part of the portfolio, confounding even members of Kashyap's own staff.

And so, Kashyap and company went in search of a dramatic, clean break with a brand-new name. And so, M12 was born.

Kill it if you have to

Meanwhile, all of those startup mentorship programs will be operating under the new name of Microsoft ScaleUp. Kashyap said that the two work closely together, and that his team has even funded some graduates of their programs. But the new names make it clear that they have different goals, said Kashyap.

In general, though, the mission hasn't changed. M12 retains its mandate to invest in enterprise startups, with a broad mandate as to what that means. 3D printing company Markforged is a portfolio company, as is social learning startup Kahoot and diabetes management software provider Livongo.

M12's secret sauce, Kashyap said, is that it's empowered to make decisions as quickly as a traditional Silicon Valley venture capital firm — but that it also gives its portfolio companies access to all of Microsoft's resources. After all, Kashyap said, "if we can't help [startups], why are we investing in them?"

Microsoft Ventures M12 team

Sometimes, those resources are technical, as in providing help with implementing artificial intelligence features, or nailing tricky integration with Microsoft Outlook. Sometimes, it's a little more material: Kashyap helped broker a deal between Livongo and Microsoft itself, and now Livongo's service is offered as a Microsoft employee benefit.

Either way, Kashyap said that while he's always happy when Microsoft can help a portfolio company, supporting or even using Microsoft technology isn't a prerequisite for getting funded by M12. He's looking for startups that can succeed in the long-term, even if they're building an app for Google's Android that runs on Amazon's cloud.

"We are not selecting companies based on platform," said Kashyap. "We are choosing the best companies."

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