Venture capitalist to startups: Don’t pursue acquisition by Microsoft

Software startups at an industry event Tuesday received a clear message from the venture capital community and Microsoft: Do not automatically look to Microsoft as a rainmaker.

Fledgling companies were instructed not to set out to be acquired by Microsoft. Moreover, Microsoft usually relies on venture capitalists to seed startups rather than funding companies on its own.

Software executives in attendance were told not to expect Microsoft to be their sales channel, either.

While emphasizing the symbiotic relationship between Microsoft and smaller software companies, speakers at an IBDNetwork event entitled "Partnering with Microsoft: The Insider’s Guide for Startups," stressed that partners cannot simply ride the Microsoft wave to profitability. While Microsoft can provide a great deal of assistance through its partner programs, third-party software must complement Microsoft and offer value, speakers said during presentations held at Microsoft offices here.

"Microsoft is not a channel, and expecting that Microsoft is going to drive revenues [for you] is probably a going-out-of-business strategy," said James Phillips, CEO and co-founder of Akimbi Systems, a virtualization software company that partners with Microsoft. Startups should not expect Microsoft to sell their product for them, he said.

Paul Krill

Full Story: http://news.yahoo.com/s/infoworld/20051130/tc_infoworld/72334