Microsoft’s venture capital arm, M12, has $275 million to invest this fiscal year in its quest to discover the next big thing. While M12 does not account for Microsoft’s significant early investment in OpenAI, it has a sizeable cache to invest, an amount that has remained largely stable over the years.
Despite its budget, M12 tends not to spend its entire allowance, typically investing between $150 million and $250 million annually in startups.
Currently, M12’s portfolio contains 110 active investments, including AI platform Typeface.ai, which was recently integrated into Microsoft’s consumer insights platform. Microsoft has also invested in the startup Split.io, integrating its delivery platform for developers using Microsoft’s Azure services.
M12 underwent a strategic shift in 2023 under the direction of Michelle Gonzalez, focusing more on startups aligned with Microsoft’s priorities such as AI, cloud infrastructure, and cybersecurity. This switch was prompted by a reevaluation of returns, prioritizing strategic benefits over financial return alone.
An illustration of this strategy can be seen in Microsoft’s $13 billion investment in OpenAI. This has resulted in the application of OpenAI’s technology in Copilot, an AI assistant being integrated into nearly all Microsoft products.
