Microsoft has been ramping up its effort to raise its profile with the startup community through programs like accelerators outside of the U.S. run by Microsoft Ventures.
Today, that strategy is taking a turn towards Microsoft’s home market, down the corporate route and stopping at the Internet of Things: Microsoft is launching a new accelerator in Seattle in partnership with American Family Insurance focusing on the home automation market. Applications are open from now until July 21, and the accelerator will run August through December.
Of all the areas that Microsoft could focus on in this accelerator, why home automation?
“Home automation is an interesting area for us, and extremely important when you combine it with cloud services and mobile devices,” Rahul Sood, GM and partner at Microsoft Ventures, said in an interview.
As with its other accelerators, Microsoft will not take an equity stake in companies that join the program — although they reserve the right to potentially invest in one of the startups in a cohort if they see an opportunity (as Microsoft has in the past).
Microsoft instead offers infrastructure, a place to work, and access to mentors among people who are at Microsoft. As part of the program, American Family Insurance is offering a minimum optional $25,000 equity investment in each startup that becomes a part of the accelerator.
The accelerator is the first that Microsoft Ventures has based out of its headquarters since first announcing the Microsoft Ventures program last year.
The focus up to now has been on approaching international developers, with accelerators in Bangalore, Beijing, Berlin, London, Paris and Tel Aviv. (To be clear, there have been other accelerators run by Microsoft in the U.S. before, such as this one focused on startups developing for Kinect, which is not longer operating.)
The move to opening a program in the U.S. comes at a time when there is something of a glut of programs out there offering help to startups. Perhaps as a sign of just how mainstream tech has become, and how software and hardware tools are making it easier to start companies, there are dozens of accelerator programs out there, from well-known groups like Y Combinator, 500 Startups and TechStars through to smaller, more regional efforts like this accelerator in Boise.
So, perhaps as a better way to differentiate itself from the rest of the accelerator pack, it’s interesting that Microsoft is zeroing in on a specific vertical.
Sood gets defensive when I suggest that the decision to look at home automation is in any way a response to the work that Google or Apple have been doing in this area.
“This is something that we have been working on for a long time, long before Google bought Nest,” he says, citing the video that Microsoft produced in 1999 and embedded below. (It’s hokey but I guess gets his point across.) “There are plenty of technologies apart from what Nest is doing with the thermostat.” He says that the idea will be not only to encourage hardware startups to apply but also those working purely in software.
He also adds that by narrowing the focus it will make it potentially easier to vet applicants. “Because we are opening it up nationally we know we will get a lot of applicants,” he says, with the number in the other cities typically between 400 and 1,000 applications, with the U.S. version possibly attracting more. “Having this focus is a good experiment.”
Worth pointing out, too, that this is also not the first accelerator focused on a specific vertical. Microsoft announced one focused on healthcare accelerator in Tel Aviv earlier this year.
On the subject of partnering with a corporate for the effort, Sood says the arrangement gives startups at least one potential opening as a result to market the products longer term. “American Family has tens of millions of customers,” Sood points out. “It’s trying to be more proactive rather than reactive.”
It’s a template that I’ve heard Microsoft may be interested in repeating with other corporates, with Sony specifically being mentioned, although Sood would not comment on Microsoft Ventures’ future plans.