Microsoft incubator start-ups graduate with honors, gifts

On Graduation Day, it’s customary to give the graduates a gift. For companies in Microsoft’s Azure Accelerator program, the presents this year were substantial: Eight of the thirteen companies that participated in the second “class” sponsored by Microsoft Israel raised a total of $4 million from investors, with investments in another two start-ups nearly wrapped up.

The accelerator program is one of the jewels in the crown of MS Israel — so much so, said Zack Weisfeld, Microsoft Israel’s director of business development, that the successes of Israel’s accelerator program are inspiring the company to take elements of the Israeli model and apply it elsewhere.

“The accelerator was an Israeli project to start with, and has become a showcase for the rest of the Microsoft world,” Weisfeld said before Monday’s Startups Demo Day. Companies pitched their products and achievements on stage in front of an audience of industry insiders and potential investors, with a polished presentation utilizing the technology and business skills they picked up in the 4-month-long program.

The 13 companies chosen for the program could already be considered the “cream of the crop” of Israeli tech startups; in order to qualify for the program, they had to beat out some 300 other competitors. The Azure Accelerator is aimed at early-stage start-ups and as part of the program Microsoft provides office space, training, mentoring, and other benefits. One of the perks is the inclusion of participating start-ups in the Microsoft BizSpark program, which provides free software and development tools for start-ups  and a starring role at Think Next, Microsoft Israel’s annual innovation event that highlights the company’s most promising upcoming technologies.

And the TLC Microsoft provides the companies shows, said Weisfeld. The money raised by the start-ups in this round — as well as in the first Azure group that went through the program in 2012 — is far more per capita than companies in accelerators in the US do in the early years; most accelerator graduates in the US take six or seven years to raise the hundreds of thousands, or even millions, that Azure start-ups raised after just four months in Microsoft’s program. MS did not specify which companies received funding, or how much they received. However, two of the start-ups — Shopetti and LiveTune — said at a press conference Monday night that they had received funding.

And, if the first Azure graduating class is any indication, the investments are likely to continue to flow. So far, the 11 companies that were part of that group have raised over $6.5 million, an average of $800,000 — with social-media video platform Stevie.tv the big winner, having received some $1.5 million in funding so far.

Hanan Lavie, director of the accelerator, said that the investments this time prove that the first-round successes weren’t just a fluke. “The results of this program aren’t due to happenstance, but to hard work and methodology. The wide range of knowledge and experience that Microsoft made available to the companies — such as extensive sessions with mentors and experts in the industry — ensured that the companies were ready for market, and helped to open many doors for them. And the great interest of the many investors already in the early stages of the program testifies to their faith in the potential of these young companies,” he added.

The start-ups in the just-ended Azure Accelerator ranged from the consumer oriented (LiveTune, with a personalized app to teach music; Shopetti, an app for social shopping; Pixtr, a technology to automatically fix photos) to the technical/industrial (Screemo, developing a platform for electronic signage; Scoreoid, with a back-end solution for gaming), and even developing medical technology solutions (Telesofia Medical, developing a video platform for medical information).

The common denominator among them, said Weisfeld, is that most will be using the cloud for their apps or platforms. “The cloud is here to stay, and Microsoft has embraced it fully,” enthused Weisfeld. Microsoft Israel will actually be following up on Startups Demo Day with its first-ever Cloud Day — to discuss the cloud in general; and Microsoft’s cloud specifically, and how it can help start-ups  Demo Day is a perfect segue into Cloud Day,” Weisfeld continued. “We see the innovation coming out of start-ups as an important part of Microsoft, and we believe the cloud can help businesses to better leverage their resources for success. We’re here to help in that process,” said Weisfeld. For Microsoft, he added, helping start-ups innovate and succeed “is one of our most important bets for the future.”