Microsoft France’s start-up programme opens first innovation centre

Microsoft’s Jean-Philippe Courtois: endorsed agreement with Lille.

Endorsed by Jean-Philippe Courtois, president of Microsoft International, the recent agreement between Microsoft France and the city of Lille illustrates where this strategy is heading. The agreement, signed by country manager Eric Boustouller and Lille mayor Martine Aubry, covered things such as an e-voting project and a back-to-work social programme for the unemployed.

But it also includes the move of some Microsoft operations into the newly built incubator Euratechnologies. There, Microsoft will help in the creation of 20 start-ups every year in a local version of its national start-up initiative, Idées.

Clients rather than money

Since November 2005, Microsoft France has selected 75 start-ups for Idées, which provides technological and commercial support to emerging companies – instead of, as it did during the dotcom bubble with its corporate venture fund, investing in them. That is because, according to Codorniou, “we want to be neutral”. In other words, if these companies are financially dependent on Microsoft they will appear too close to the Redmond giant.

The main backing that Idées provides is technology support, such as validating architecture in its Paris Technology Centre. It also backs the selected start-ups with its marketing power: of the 15 partners Microsoft brought aboard during its last Vista tour, 7 were Idées start-ups.

With 96 per cent of its sales channelled through partners, Microsoft’s natural interest in the Idées programme is to enlarge its ecosystem. Clients such as construction group Bouygues or mobile operator KPN have found solutions that were not developed by Microsoft but by Idées start-ups such as Excentive or Myowa. In exchange, these SMEs have found Microsoft’s endorsement crucial in opening the doors to such big customers.

Over the past three years, the 25 start-ups selected by Microsoft France each year from among 400 candidates have raised an average of €3 million, thanks partly to an agreement with the business angels association France Angels (See “Microsoft enrols French business angels”, Science Business, 8 November 2007). They also have recruited an average of 16 people each, creating all in all more than 550 jobs.

Over the period from 2005 to 2007 the start-ups selected by Idées have grown their revenues by an average of 400 per cent, according to a study Microsoft conducted last autumn.  Not all of them, of course: three have failed. But six have also been sold to industrial buyers such as AS Infor (bought by Cegid) or Pertinence (merged with US-based Intercim), which Microsoft takes as a clear sign that its selection process is working.

Most Idées start-ups have been created by experienced entrepreneurs, such as Tony Gomes from Advance IT. Some are also spin-offs from academia such as Sofia Antipolis–based Keeneo, which develops video surveillance software innovations from the IT research institute INRIA. For those, Idées has now created a software academy where experts help would-be entrepreneurs with business plans, market analysis and so on.

An Idées for each country

With its new agreement with Lille, Microsoft wants to replicate the same logic – with more early-stage companies and at a very local level. But Idées’ successes have also been identified as a sound business strategy for global operations.

Next month, Codorniou is moving to Seattle to coordinate the implementation of Idées in every country where Microsoft have affiliates– in other words, just about everywhere. Already, the company had expanded its programme from France to neighbouring countries such as Germany and the UK, where 20 start-ups have been selected. The plan is now to become truly global, from China to the US, acting at local levels with initiatives such as the one in Lille.

That is probably because Microsoft wants to keep its first-mover advantage. “The fact that two other companies are now emulating what we did is clearly preparing tough competition,” says Codorniou. It’s also a clear sign that leading IT companies are back with a strong interest in start-ups unseen since the bubble burst.