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Microsoft’s venture fund M12 partners with Mayfield and Pivotal Ventures to announce $6 million competition for women-led enterprise startups

In its second year, the Female Founders Competition will help accelerate funding for women entrepreneurs globally

Melinda Gates, Peggy Johnson and Navin Chaddha

Editor’s note – Oct. 17, 2019 – The sentence below regarding Boston Consulting Group’s estimates of the global economy was updated following initial publication.

REDMOND, Wash. — Oct. 17, 2019 Microsoft’s M12, Mayfield and Pivotal Ventures on Thursday announced the second global Female Founders Competition to accelerate funding for women entrepreneurs developing business-to-business software-as-a-service and deeptech solutions. Eligible women-led startups developing enterprise tech solutions in the United States, Europe, Israel and India are encouraged to submit applications beginning Oct. 17, 2019. Four winning companies will receive a total of $6 million in venture funding, along with access to technology, resources, mentoring and other benefits.

“Last year’s competition helped highlight that there are innovative female entrepreneurs developing enterprise tech solutions, and they just aren’t getting equal access to capital,” said Peggy Johnson, executive vice president, Business Development, Microsoft Corp. “The tech industry can’t afford to keep leaving women’s good ideas on the table. We need to level the playing field for female entrepreneurs, and together with Mayfield and Pivotal Ventures, we aim to do just that with our second Female Founders Competition.”

Venture capital funding, particularly for seed-stage companies, is critical to power ideas from incubation to go-to-market. Venture funding for female-founded companies continues to be nominal in comparison with dollars invested in male-only-led teams. Last year, companies founded solely by women garnered 2.3% of the total capital invested in venture-backed startups, according to PitchBook.1

Regardless of this disadvantage, female founders continue to deliver outsized returns. In a study conducted by MassChallenge and Boston Consulting Group (BCG), women-founded businesses delivered more than two times as much revenue per dollar invested than their male counterparts. If women and men participated equally as entrepreneurs, BCG estimates the global economy could experience up to a $5 trillion boost. According to Gartner, “The enterprise software market will experience the strongest growth in 2019, reaching $457 billion, up 9% from $419 billion in 2018.”2 Investing in women-led enterprise companies is essential to economic growth and to closing the gender funding gap.

“As a firm with a 50-year history of people-first investing, we are always looking for new ways to discover bold entrepreneurs,” said Navin Chaddha, managing director, Mayfield. “We are thrilled to partner with M12 and Pivotal Ventures on this innovative Female Founders Competition, through which we will find and invest in women creating built-to-last enterprise companies. In addition to providing funding, we plan to share our playbook with competition winners on how to accelerate their journey from idea to iconic company.”

Female Founders Competition logo“I am delighted to partner with M12 and Mayfield on this important competition,” said Melinda Gates, philanthropist and founder of Pivotal Ventures. “Enterprise technology is shaping our world in countless ways, but it will never reach its full potential unless women and their ideas are equally represented within the field.”

Submissions will be accepted from Oct. 17, 2019, to Dec. 15, 2019, and are open across Europe, India, Israel, Canada (excluding Quebec) and the United States. Companies will be eligible to apply if they have at least one female founder, have raised no more than $5 million in combined equity funding and/or debt loans upon date of application, and offer or intend to release a product, service or platform addressing a critical business problem for a global market.

A live finals pitch competition will take place March 18-19, 2020, with the announcement of winners to follow shortly thereafter. Two enterprise software startups will earn investment awards of $2 million each, and two deeptech startups innovating through substantial scientific and research advances will earn investment awards of $1 million each. Full guidelines and contest information can be found at www.FemaleFoundersComp.com.

About Mayfield

Mayfield is a global venture capital firm with a people-first philosophy and $1.8 billion under management. Mayfield invests primarily in early-stage consumer, enterprise and healthIT companies. Since its founding 50 years ago, the firm has invested in more than 500 companies, resulting in 117 IPOs and more than 200 mergers or acquisitions. Some notable investments include HashiCorp, Lyft, Marketo, Mammoth Biosciences, Moat, Poshmark, ServiceMax and SolarCity. For more information, go to https://www.mayfield.com or follow @MayfieldFund.

About Pivotal Ventures

Pivotal Ventures is an investment and incubation company created by Melinda Gates. We partner with organizations and individuals who share our urgency for social progress in the United States. Together, we grow understanding around issues, expand participation, encourage cooperation and fuel new approaches that substantially improve people’s lives. For more information, please visit https://www.pivotalventures.org/.

About M12

As the corporate venture arm for Microsoft, M12 (formerly Microsoft Ventures) invests in enterprise software companies in the Series A through C funding stage with a focus on big data & analytics, business SaaS, cloud infrastructure, machine learning & artificial intelligence, productivity, and security. As part of its value-add to portfolio companies, M12 offers unique access to strategic go-to-market resources and relationships globally. The Company has offices in San Francisco, Seattle, London and Tel Aviv. For more information, visit https://m12.vc.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

1 PitchBook article, “The VC Female Founders Dashboard,” Feb. 28, 2019. https://pitchbook.com/news/articles/the-vc-female-founders-dashboard

2 Gartner Press Release, “Gartner Says Global IT Spending to Grow 0.6% in 2019,” July 10, 2019. https://www.gartner.com/en/newsroom/press-releases/2019-10-07-gartner-says-global-it-spending-to-grow-06-in-2019

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Meeting entrepreneurs on their terms: Why Microsoft doesn’t require any ‘special rights’

Last week in Seattle, leading innovators, entrepreneurs and business minds came together to discuss best practices for startup funding and operations at M12’s inaugural summit. It was humbling to see almost 80 companies in our portfolio gathered from around the world, and to reflect on the progress we’ve made since we started the fund nearly three years ago. Our team has grown to more than 20 people supporting portfolio companies across 11 countries and 38 cities, seen four exits, and created new channels to ensure capital is reaching startups, such as our competitions to find female founded and led businesses and entrepreneurs innovating with AI.

In the days and weeks leading up to the summit, one thing I am particularly proud of is our pulse on the startup community, the relationships we’ve built there and our unwavering focus on doing what’s right for the entrepreneur. We’ve learned some important lessons, including one of the most egregious contributors to the poor reputation of corporate venture capitalists (CVCs) – terms and conditions like “Rights-of-first” (ROF), which we believe favor the corporation and restrict the startup.

Microsoft’s mission is to empower every person and every organization on the planet to achieve more. ROF terms restrict that for entrepreneurs. Simply put, ROF terms limit an entrepreneur’s ability to maximize their exit valuation. Stifling those options can be detrimental to a startup’s growth and consequential to the return profile of founders and all the investors. That’s why at M12, we believe ROF and similar terms are neither necessary nor valuable.

While we’ve always believed this, we weren’t following through in practice when other CVCs utilized these rights in companies we invested in, leading us to ask for the same during the first year our fund operated. And while we’ve never asked for these terms if the other investors didn’t have the same, in retrospect, we should have never asked at all. Since then, we’ve stopped asking for any special rights regardless of what other strategic investors held in the company and we’ve started actively educating entrepreneurs to resist these terms and try to remove them if they already exist.

We firmly believe that being fully aligned with founders is the only way to drive value to all stakeholders, including M12 and Microsoft. So, we want to go one step further. Instead of simply thinking, “What’s best for us,” we want to encourage the CVC community to start thinking “What’s best for all,” starting with adopting similar rules of engagement M12 currently employs to benefit the entire startup ecosystem:

  • M12 will not require any ROF term as part of its investment. Ever. It’s not only the right thing to do, it’s good for business.
  • As part of our due diligence, M12 will evaluate the business upside not only for our fund, but also whether we can meaningfully help you.
  • If M12 chooses to invest, we’re with you for the long term, for your company’s lifecycle. That may mean different things at different times, but we won’t be driven by artificial milestones or deadlines.
  • If M12 chooses not to invest, we will explain why. We will also try our best to suggest other ways you can gain funding or other resources to grow your business.

It’s time to reinvent what it means to be a CVC and live up to what makes us an attractive investment partner to begin with – empowering entrepreneurs through investments, insight, and unparalleled access to Microsoft. The next time a founder asks me if we are a strategic investor, I want to be able to say, “It shouldn’t matter because we’re all aligned in fostering your success.”

To learn more about M12, visit its website.

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