Corporate Venture Capital Investing at Microsoft - with Peter Berg, Managing Partner at M12

**Ray Rike** (0:00)
Hello, I'm Ray Rike, Founder and CEO of Benchmarkit, and your host of the Metrics That Measure Up podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now, on to today's show.
Welcome to today's episode of the Metrics That Measure Up Podcast. Today, I am joined by Peter Berg, the managing partner at M12, the Microsoft Internal Venture Capital Organization. We'll be covering four main topics with Peter today, including the role of a corporate VC, both inside a tech company and outside of a tech company. Second, the evolution of venture investing in 2024 and beyond. Number three, Megatrends that will shape the future of technology investing over the next two to three years. Number four, we're going to ask Peter bring out his crystal ball and give us the top three Cloud and SaaS industry forecast for 2024 That Peter, please take a moment to give a brief overview of your journey to becoming a guest here in the Metrics to Measure Up podcast.

**Peter Berg** (1:26)
Thank you so much, Ray. It's a pleasure to be with you. I'm honored to be on the podcast. As you mentioned, I'm a managing partner with M12, which is Microsoft's corporate venture fund.
Prior to joining M12 about a year ago, I was working in an operating role for a company called Very Good Security. They're a data enablement platform primarily for fintechs. Before that, I spent several years at Visa, much of which was spent starting and then scaling up Visa Ventures, which is actually their in-house corporate venture arm. Most of my career, believe it or not, has actually been spent on the operating side. Even though I'm solidly in the investor camp right now, I've spent the majority of my career operating and building startups, frankly, in the SaaS space primarily. I started my career as an actuary, believe it or not, not an industry known for rapid innovation, but I had the good fortune to land at a boutique firm, and we actually created a software company. We automated and scaled what was a very manual process, basically very expensive talent jockeying Excel spreadsheets and turned it into a SaaS platform, the first of its kind actually. That was then acquired by JP Morgan, and ever since I've basically been in the software as a service industry before, it was, I guess, talked about quite that way. That's what led me here ultimately to Microsoft and M12.

**Ray Rike** (2:47)
Well, as a former actuary, someone who took Excel and turned it into a SaaS platform, that Metrics that Measure Up podcast is a perfect fit for you. But we're not going to talk a lot about accounting and those type of financial metrics today. But you know what? I was really interested with your operating background and then the venture capital experience at Visa versus Microsoft. Does the role of an internal VC change in a tech company versus a non-tech company, even though I know Visa is very tech-centric? Does it change as far as what the role of the internal VC is at Microsoft?

**Peter Berg** (3:25)
It's a good question. I think there are as many flavors of corporate venture capital as there are probably firms that do it almost. But Visa was actually structured very similarly to the way M12 is set up. And I think corporate venture capital is a unique animal. And but there are a lot of I think if you could do it well, it's hard to do well, you know, despite best of intentions, it's not not easy. But I think if you set it up the right way, it can really be transformative. Having been in the startup world and the enterprise side of things and operating and investing, I've long held the belief that if you can actually marry the strengths of startups, which are typically fast moving, nimble, agile, innovative, but they lack kind of scale and distribution, if you can marry their strengths with the strengths of incumbents, which is, you know, often scale, distribution, access, resources, magic can happen. And actually Visa was set up in a very similar fashion to the way M12 is, we didn't require any sort of commercial agreement to do an investment. It was pure venture investing. It was not business development in venture clothing. And M12 is the same thing. We're making equity investments in early stage companies, C through Series B, aligned to specific thesis areas that are aligned to areas that Microsoft cares about or business areas that are of interest to Microsoft. We do operate, I would say, pseudo independently. We have a degree of autonomy in the deals that we do. Which actually, I think, is highly beneficial. It allows us to invest in areas that we don't have to go ask for permission to do a deal. But we also are very aligned to and with Microsoft because we want to be able to bring that strategic element to the benefit of our portfolio companies. So people often take our money because we have a relationship with Microsoft, not in spite of it. That being said, we don't require them to do anything unnatural.