Microsoft Chasing European Startups for Future Cloud Business

Aaron Ricadela (Bloomberg) -- Microsoft Corp. is doubling down on its attempt to back Europe’s next big software startups, in order to win over future business to its cloud platform.

The U.S. company is set to reveal in Monday a new Berlin-based, four-month program focusing on supporting companies that have raised early-stage financing and are building software for some of the fastest-growing areas in computing, including connected factories and vehicles, AI, blockchain databases and computer vision.

Participants in the new Microsoft accelerator will receive $500,000 of Azure cloud-computing credits, along with access to outside investors, Microsoft sales teams, and technical experts.

The Berlin outpost of the “Microsoft for Startups" accelerator will include product development help, management coaching and access to the Redmond, Washington, software giant’s developers and sales staff.

Microsoft faces increasing competition to win over innovative companies at a time when rivals including Alphabet Inc.’s Google, Amazon.com Inc., Salesforce.com Inc. and Oracle Corp. are also arming promising startups with developer tools, database software and cloud-computing platforms.

“Startups represent tomorrow’s workloads,” said Charlotte Yarkoni, a corporate vice-president in Microsoft’s cloud growth and ecosystems group. “Not every startup gets a plane ticket to Redmond,” she says, but the company wants to be “present in their technical communities.”

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Tellmeplus, whose predictive maintenance software can be installed alongside factory robots, in cars or on windfarms, is one of 10 European startups chosen for Microsoft’s new Berlin accelerator.

“Things are changing,” said Tellmeplus co-founder Jean-Michel Cambot, who co-founded software maker Business Objects, which was sold to SAP SE for $6.8 billion. “Microsoft has a good reputation, but it was not like that some time ago; they weren’t so easy to access. In the past everything was decided out of the U.S.”

Microsoft’s accelerator program in Berlin previously focused on helping a mix of fledgling business and consumer apps, such as travel portals and sellers of online piano lessons.

Under prior acceleration programs in Berlin and other cities, the company brought groups of startups into its offices for coaching and sale help. But younger companies with less mature products weren’t always ready to take advantage of connections made by Microsoft’s sales staff, said Zack Weisfeld, who heads Microsoft’s global accelerator programs. 

The program is separate from Microsoft Ventures, which has taken equity stakes in startups.

Participants in the new program –- 23 companies applied -- include Nyris, which can identify objects in photos and video, counts Daimler Trucks among its customers, and is pitching Volkswagen AG and Porsche. Crate.io makes a database for sensor data and claims one customer spending $1.5 million on the technology, which could drive Azure installations, said Iskender Dirik, a managing director Microsoft hired in May to lead the Berlin accelerator.

Microsoft’s Azure cloud-computing service generates just 27 percent of the revenue Amazon reaps from Amazon Web Services, though it’s picking up ground, according to a July research note from Barclays Plc.

Under Chief Executive Officer Satya Nadella, Microsoft has positioned itself as friendlier to outside software developers, making its database and developer tools available on the open-source Linux operating system and expanding outreach to open-source developers.

“The real attraction is Microsoft technology and the developers in Redmond,” said Ralf Treitz, CEO of Trufa, a Berlin accelerator participant whose software mines SAP data to figure out where companies are overspending to free up cash flow.