10 Things Every Startup Should Know About Microsoft's Acquisition Strategy

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Spark Capital VC Bijan Sabet met with Microsoft CFO Chris Lidell last week to discuss Microsoft’s acquisition strategy. Bijan published notes from the meeting on his blog, and we’ve paraphrased them here as helpful tips for any startup looking to Microsoft (MSFT) for its exit:

  • Acquisitions start at Microsoft when internal product teams alert corporate development to a need that acquiring a startup could fulfil.
  • Microsoft acquires companies in areas they are already in, but aren’t winning. “For example, they don’t acquire many companies that are client software related,” writes Bijan. “On the other hand, they have been acquiring plenty in search, online advertising, business solutions etc.”
  • Microsoft isn’t about to enter the e-Reader business.
  • Microsoft aims to acquire 15-20 companies each year.
  • It is “agnostic about stage or revenue.”
  • Microsoft isn’t interested in open source companies.
  • But it will buy companies with technology based on a competitive platforms.
  • Microsoft spends roughly $10 billion a year on R&D versus $2 billion per year on acquisitions.
  • Microsoft borrowed $3.75 billion at about 2.5% for up to 30 years “to have more liquidity in the US.”
  • Microsoft would have acquired 20 companies last year, but private valuations didn’t come down enough after the market crashed.

 

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