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As we start a brand new yr, I’m delighted to share some thrilling adjustments we’ve made at M12 to higher ship worth to our portfolio corporations and to Microsoft. Whereas I experimented with ChatGPT whereas scripting this weblog put up, and have been impressed by its outcomes, I made a decision on a standard, human strategy.
2022 was fairly the yr total, with some distinctive volatility within the startup and enterprise capital ecosystem. We whipsawed from valuing pace of execution and progress above effectivity, to prizing diligence with steerage towards effectivity and profitability as valuations returned to pre-pandemic ranges.
Within the six years since M12 was based, we’re proud to have invested in over 100 companies, together with 15 unicorns and 6 IPOs. Hundreds of thousands of individuals depend on the services and products from M12 portfolio corporations to guard them from id fraud, guarantee healthcare services have correct affected person information, have interaction in studying to assist them do their jobs higher and make their duties simpler although AI experiences. We’re at our greatest after we associate early with groups and can proceed to concentrate on investing in Collection A and B startups.
Nevertheless, during the last 12 months, we realized startups and Microsoft wanted a brand new M12, and so we developed a extra targeted funding technique tightly aligned to Microsoft. This has helped us create distinctive worth by way of connections, clients and distinctive advantages for our portfolio. You would possibly say we’ve leaned into the “M” of M12, the place we faucet extra into Microsoft and the ability of its community.
Our nearer connection to Microsoft focuses our work and positions our portfolio corporations to speed up their progress, two issues which are proving to be much more important as we navigate the risky macroeconomy. This strategy is a part of our new mission, and we’ve added extra skilled buyers and operators to our group to make it a actuality.
As we proceed our work to construct and nurture modern early-stage startups, our purpose is for our corporations to have significant partnerships with us that empower them to win.
We’re thesis-driven and aligned to Microsoft stakeholders to assist portfolio progress
Our core thesis areas are AI, cloud infrastructure, cybersecurity, developer instruments and vertical SaaS (areas like retail and healthcare). Nice corporations in these areas similar to Innovaccer, a healthcare information platform, and At-Bay, a cyber insurance coverage platform, usually discover success partnering with Microsoft on product integrations, rising their buyer base, constructing out ecosystems and getting traction in our gross sales motions.
We additionally selectively make frontier investments in corporations that innovate in autonomous methods and Web3, metaverse and gaming. These are areas we expect have the potential to affect the longer term route of the {industry}, and we work to make sure they can also understand the ability of getting a deeper connection to Microsoft.
For instance, Web3 is an emergent class we’re paying shut consideration to and are partnering with Microsoft to assist corporations which are innovating right here.
Space and Time, one among our newest investments on this space, is a decentralized database firm. Their plans embrace an integration with Microsoft Azure to assist clients entry, handle and run analytics on blockchain-native information, a key driver of their progress objectives. On this new period of ubiquitous computing, the excellent Microsoft Azure cloud platform and industry-leading id and safety capabilities present a trusted set of companies to develop and run Web3 functions, enabling House and Time to construct new and superior use instances in Web3.
Along with our work with House and Time, we’ve seen our thesis-driven strategy assist create extra worth throughout the M12 portfolio.
Our new strategy to stakeholder engagement and thesis-driven funding noticed its greatest second in current months with our announcement of the M12 GitHub Fund. GitHub, which is a part of the Microsoft household of corporations, is all about empowering builders. With DevOps being one among our core thesis areas, our partnership created a fund managed by M12 to make investments in promising open supply startups growing on GitHub’s platform. CodeSee, an open supply platform that permits developer groups to visually perceive their codebases, and Novu, open supply notification infrastructure for builders, are our first portfolio corporations to learn from this effort. We see the institution of this fund as a robust proof level that Microsoft, M12 and our portfolio are all higher collectively.
Leaning into the ability of our platform to ship worth
To ship on the purpose of bringing differentiated worth to startups, we’ve leveraged our redesigned funding strategy to higher assist our portfolio. Our investing and working group members at the moment are aligned to our particular thesis areas, which permits us to develop deeper experience and partnerships in these domains.
Earlier than each funding, we problem ourselves to establish the distinctive worth we are able to add. To fulfill that dedication, at present greater than half our group is devoted to serving to our portfolio corporations understand their progress targets. This assist might take the type of a startup showcase with Microsoft’s CEO and most senior leaders; introducing our portfolio corporations to new clients; a senior Microsoft government formally advising a portfolio firm; facilitating expertise collaborations or partaking in co-selling or advertising and marketing actions. Regardless of the case, we’re at all times working to search out inventive options to ship worth for our portfolio corporations.
Aqua Security has a robust historical past of working with Microsoft to incorporate deep product collaborations, and co-selling and joint advertising and marketing actions to speed up Azure deployments. In a single instance of this relationship, Aqua allows software program licensing and procurement instantly by way of the Microsoft Azure Market, permitting clients to make the most of present buying strategies in place for Azure companies. This resolution simplifies the method of constructing out a safe infrastructure for cloud functions, and clients deploying containers on Azure can make the most of the answer to shortly full their buying cycle.
Aqua and Microsoft have collectively performed a collection of regional advertising and marketing packages to teach clients on cloud native applied sciences and offered the chance to work together with native technical assets from each corporations. As Aqua’s enterprise buyer base and scale of their cloud deployments improve, Microsoft’s prime place as a cloud chief is a particular profit to their success.
This sort of collaboration and lots of others prefer it make us assured we could be a driver of innovation and an enabler of progress. By investing in areas the place we’ve a novel potential to assist our portfolio corporations, we see a vivid future for our work forward and the expertise that our fund will allow. We’re excited by what our strategy can do for entrepreneurs, and we are able to’t wait to see what’s in retailer for 2023 and past.
Be at liberty to achieve out to us or study extra about our group at m12.vc. We’re at all times seeking to join with fascinating corporations and companions to assist speed up the way forward for expertise.
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