Meet M12: Microsoft’s venture capital arm

Other than “Do we need a beer pong table?,” one of the most common questions that a corporation asks is “What do we do with our cash”?

The team at Microsoft asks that question while looking at a money pile that now clocks in at an absurd ~$130B.

One way Microsoft deploys the cash…

… is via its venture arm M12

According to Crunchbase, M12 was launched in 2016 and — investing only Microsoft’s money — has done 107 deals.

Here are the rules it currently runs by:

• Financial returns: While some corporate VC firms may acquire startups for strategic reasons, Microsoft is focused on achieving a high return.
• Clean term sheets: Microsoft puts almost no restrictions on its investments (it used to include a “right of first” term that allowed it to buy out the startup first, but no longer does).
• Main investor: Microsoft is leading more investment rounds (and it’s increased its check size to $20m vs. $10m in the first 3 years)

Startups benefit from the Microsoft machine

M12 invests in cutting-edge technology across industries from biotech to robotics to productivity to cybersecurity.

Per Crunchbase, a startup that receives a check gets “Microsoft muscle” behind it, including:

• Buying the startup’s services
• Integrating the technology into Microsoft’s existing ecosystem (Azure, Office)

Microsoft isn’t the only Big Tech VC

Google (GV), Salesforce (Salesforce Ventures), Qualcomm (Qualcomm Ventures), and Intel (Intel Capital) have all done more deals than M12 in the past 5 years.

With a $2.2T market cap, it’s also hard for a VC deal to move the needle.

To date, M12 has invested in 13 unicorns ($1B+ valuation). If it really wants to make a splash, we think Excel-themed bedding fabric is the next frontier: