Microsoft Ventures has restructured its incubator and accelerator arms in Israel, while State of Mind Ventures has closed a $75 million investment fund.
Microsoft Ventures splits incubator & accelerator arms
Israel is seeing Microsoft realigning its startup-oriented businesses. The US tech giant is shifting venture investment and accelerator arms to achieve greater focus on startup support. the Microsoft Ventures name to a new venture capital (VC) fund, while rebranding the original programme as Microsoft Accelerator.
According to a report from Geektime, the new fund will oversee older investments and focus on both Israel and North America. This permits the original programme to increase its focus on accelerating and incubating startups on a global basis, splitting Microsoft’s venture investment and accelerator arms.
In a corporate blog post, Microsoft Ventures corporate VP, Nagraj Kashyap, explained: “In Microsoft’s history of engaging with and supporting startups, we’ve done a lot of investing, but not a lot of early stage. Because we would often invest alongside commercial deals, we were not a part of the early industry conversations on disruptive technology trends. With a formalized venture fund, Microsoft now has a seat at the table.”
Accordant to this, the new Microsoft Ventures will fill a gap between seed-stage investment and larger financing rounds, suggesting a possible focus on Series A, B and C investments. Currently, the Microsoft portfolio contains hundreds of SaaS firms.
Kashyap noted: “There are often questions around corporate venture programs versus venture capital firms, and whether or not they are at odds or create disadvantages for entrepreneurs. In our case, we are driven by the desire to help early stage companies take advantage of Microsoft’s financial, technical and GTM resources.”
The new Microsoft fund re-focuses on Tel Aviv, with the other centres it targets being New York, the San Francisco Bay Area and Seattle, with an emphasis on Azure cloud infrastructure and software firms that are complementary to product that could help improve Microsoft’s respective suites of products. According to Kashyap, observers can expect to more investments targeted at the machine learning and cybersecurity domains.
State of Mind Ventures raises $75m fund
Israeli venture capital firm State of Mind Ventures (SOM) has closed their first at a hard cap of $75 million. SOM is co-founded by Pinhas Buchris and Yuval Baharav in January 2015, both of whom have backgrounds in technology and business. The CFO of SOM is Nir Adler, who also serves as the principal of the firm. Adler was formerly a senior analyst and chief of staff at the budget department of the Israeli Ministry of Defence.
Based on a Geektime report, they began raising the funds in September 2015, with the $75 million goal as the quantum required to establish the fund and initiate investments in early stage Israeli startups. To date, their portfolio include investments in four startups.
Speaking on the development, Bahrav commented: “We are happy that we were able to raise around half of the fund from Israeli institutional investors. We’re an Israeli fund and for us to manage funds that are part of people’s lives here is really significant and contributes to the sense of being a responsible and disciplined investor.”
In his interaction with Geektime, Baharav explained the motivation for opening the early-stage fund was based in a long term vision of the role of technology in shaping the future.
He elaborated to Geektime: “The first thing is like any other entrepreneur in the sense that you want to create something new, to build your own business. It’s the same thing as when you found a startup, it’s exciting.
“We both felt that we can really help companies and entrepreneurs to succeed and do it right. We felt that there is a real significant opportunity to operate in this space of super technological startups, companies that build tomorrow’s technological infrastructure,” Baharav added.
The latest investments and his interaction with Geektime suggest that the fund is targeting investments in deep technology, given Baharav’s citation of domains like space, AI and nanotechnology amongst other domains, as areas of interest for the firm.