Microsoft pledges AI spending with new start-up fund

Microsoft Ventures launches dedicated AI start-up fund and makes first investment

Microsoft Ventures has launched a new fund for artificial intelligence (AI) start-ups as it broadens its focus from cloud investments.

Launched in May, Microsoft Ventures initially focused on cloud start-ups but an expanded remit has now been announced alongside an investment in Canadian incubator Element AI - the first to benefit from the dedicated fund.

In a blog post Microsoft Ventures global head Nagraj Kashyap said the investment arm wants to partner with start-ups aiming to have a "positive impact on society".

"With today's news, Microsoft Ventures expands our original mandate of supporting cloud companies that help enterprises navigate digital transformation," he said. "This new fund will make investments of similar size to previous Microsoft Ventures investments, and will only include businesses with promise for strong financial returns, as opposed to non-profits or NGOs (non-governmental organisations).

"AI holds great promise to augment human capabilities and improve society by tackling some of the world's biggest problems.

"Companies in this fund will help people and machines work together to increase access to education, teach new skills and create jobs, enhance the capabilities of existing workforces and improve the treatment of diseases, to name just a few examples."

Microsoft Ventures now has investments in 19 start-ups and Kashyap said he expects the rate of investments to increase now a new fund has been launched.

Angel Eager, research director at TechMarketView, said the new fund is the next step of a strategy that has seen Microsoft start to formalise its AI strategy, laid out at its Future Decoded event earlier this year.

"With so many new and existing companies tumbling into this technology area, the Microsoft Ventures fund is aiming to be somewhat selective by focusing on AI companies with a positive impact on society," she said.

"This is the latest strategic AI move by Microsoft as it infuses AI across the business.

"Other moves include acquisitions such as Swiftkey, the announcement of its 5,000-strong AI and Research Group in September and participation in groups such as OpenAI and Partnership on AI, as it invests deeply in the technology that will underpin intelligent data-led applications and digitalised businesses."