Nagraj Kashyap-led Microsoft Ventures launches new fund for AI startups

US-based Microsoft Ventures, the venture capital arm of software giant Microsoft, announced on Monday that it has formed a new fund for investments in startups focused on artificial intelligence.

Nagraj Kashyap, who heads Microsoft Ventures, confirmed the development in a blog post.

The corpus of the new fund was not announced, but the company has already made its first investment from this fund in Montreal-based firm Element AI.

"This new fund will make investments of similar size to previous Microsoft Ventures investments, and will only include businesses with promise for strong financial returns (as opposed to non-profits or NGOs)," Kashyap wrote in a blog post.

Founded in 2016, Element AI offers artificial intelligence solutions to large corporations through its incubator platform. The firm's team comprises academic researchers from research labs across North America.

Microsoft has restructured its startup programmes to separate its venture arm and accelerator programme. Officially launched in May this year, Microsoft Ventures will focus on Series A and beyond investments. Till date, it has funded five startups in the US and one in Israel. Microsoft Accelerator is a global programme that provides market-ready startups resources, knowledge and expertise to scale their businesses.

Microsoft Ventures made its first investment in India in June this year. Pune and San Francisco-based customer support software provider Helpshift Inc raised $23 million (around Rs 153.6 crore) in a Series B funding round led by Microsoft Ventures and Salesforce Ventures. Cisco Investments later joined the funding round in November.

Kashyap is a graduate of University of Mysore and holds an MBA from J L Kellogg Graduate School of Management. He used to be the global head and senior vice president of ventures and innovation at Qualcomm Ventures before moving to Microsoft Ventures.

Last month, OpenAI, a non-profit research organisation for AI backed by Elon Musk, partnered with Microsoft for the latter's cloud service, Azure. The tie-up will enable OpenAI to conduct research on deep learning and AI and share the results on the cloud.