At Microsoft 2.0, start-ups get top billing

As the stakes get bigger in the tech world, Microsoft has found that its core business — selling Windows, Office, and its other software and system products — just isn’t enough any more. In order to compete with the likes of Apple and Google, MS has had to make some changes, including the establishment of a chain of accelerators that helps start-ups develop technology and business.

The idea came from Israel, said Zack Weisfeld, a senior director of Microsoft Ventures, the start-up investment arm and sponsor of the MS accelerators. The Israeli accelerator in Herzliya set up just two years ago was the first of the dozen Microsoft Ventures Accelerators and the role model for them all.

“We were the first to run an accelerator of this kind for Microsoft,” Weisfeld said. “It was seen as an experiment by the company, but people inside the company believed in what we were trying to do.”

The cities where MS Ventures accelerators are operating, among others, include London, Paris, Beijing, Seattle and Bangalore — all modeled on the original Israeli accelerator.

The program has paid off for Microsoft, and for the start-ups as well. One hundred and nineteen companies worldwide have gone through the program, seven of which have been acquired. A quarter received funding of a million dollars or more in their Series A fundraising (most of the others got financing of under $1 million), and 84% of those got to further rounds of financing.

In Israel, 35 companies have gone through the program, and among them they have raised an average of a million dollars per start-up from investors. “Our statistics are much better than those of the average accelerator,” said Weisfeld.

Last week, the third class of start-ups “graduated” from the Israel accelerator, having gone through a four-month program chock-full of help and mentoring at the hands of some of Israel’s top figures in business, finance, technology, and anything else a start-up needs to succeed. Microsoft does not provide money to companies accepted in the program, but neither does the company take a stake in a start-up, as many accelerators do. The companies presented their technology at Microsoft Demo Day, which took place in Tel Aviv.

Most people don’t associate the term “open source” with Microsoft, but in the Ventures Accelerator program, open source — or anything else a start-up wants to do — is just fine. There’s no requirement to program in Windows, or even for Windows; many of the projects use Linux or other Unix derivatives to do their programming work, and the same goes for databases, web authoring programs, or office suites. It’s a great deal for start-ups, which is why an average of 1,000 entrepreneurs have applied for the 10 or so spots in each of the three programs so far (companies can apply for the next round at this link).

An even greater advantage for start-ups, said Weisfeld, was the fact that Microsoft was in a better position than perhaps anyone else to put Israeli start-up technology in front of large corporations — all of them Microsoft customers — that could be interested in their products.

Zack Weisfeld (Photo credit: Courtesy)

“We provide an unparalleled route to customers, to markets and investors,” said Weisfeld. “There is plenty of money out there for investment, but for start-ups, getting customers is the big challenge. We can help these companies get those customers, because of our position in the market. Helping to spread the technology to our customers is one of the main purposes of the MS Ventures accelerator program.”

Although companies do not have to provide MS with any equity in order to get into the accelerator program, Microsoft Ventures, as an investment fund, can invest in any of the companies in the program — and recently, the fund made its first investment, in Israeli company SkyGiraffe, which provides a solution for enterprise users to build a mobile app using any table or stored procedure, publishing it to thousands of users, and accessing data from a variety of proprietary or open source databases (Oracle, MS SQL, MySQL, etc.).

SkyGiraffe’s business, and business model (with apps based in a secure cloud) are right in the “sweet spot” for Microsoft’s customers, said Rahool Sood, the general manager of Microsoft Ventures. On a recent visit to Israel, Sood said that “SkyGiraffe is a great example of what Microsoft can do for start-ups. They are an enterprise app, and of course all of the Fortune 500s are Microsoft customers, so we can hopefully connect them with customers and help them grow.”

The next SkyGiraffe — or the next Waze, for that matter — may just have passed through the Herzliya accelerator. Among the companies with exciting technologies that underwent the program:

• CellMining, which uses crowdsourcing to improve cellphone networks

• Kytera, which makes a system to monitor seniors’ activity patterns and uses cloud-based big-data analytics to dynamically learn their routine in order to detect deviations and distress situations

•  Vubooo, which allows fans to be interactively involved during a live TV sports match

• ConferPlace, the first conference platform that delivers a full conference experience online.

The top company at the Demo Day event and winner of the Mentor’s Choice chosen by a panel of judges was Roojoom, which lets websites marshal their own and others’ content to increase user engagement. With Roojoom, users curate web content, organize it, add insights and give readers a guided tour around the web. According to the company, the average person reads five times more content on sites with Roojoom installed. The company launched its beta application just three months ago and already has 300,000 monthly links read by users, with the platform used by several large sites including financial site eToro.

“Roojoom was chosen since they are tackling a problem that is common to everyone using the web — there is a lot of information out there and despite the great jobs that the different search engines do, you eventually end up with a mess of URLs, with minimal context and without knowing what is relevant to you or not,” said Hanan Lavy, director of the Herzliya accelerator. “On the other hand, there are experts in every field that already collected information and know how to sequence it, but there are very few tools out there to expose their work to the world. Roojoom is at this critical junction. It has a great potential to turn into a big business with lots of users.

“In addition, the team is great,” Lavy added “Strong executers, worked quite some time together and are eager to learn and get better at every step they do. We like this kind of people and believe they can leverage the accelerator to its best.”