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Editor鈥檚 note: This is part of a series in which we interview active investors in artificial intelligence. Previous interviews were with investors at General Catalyst, Bessemer Venture Partners, Accel,听 Insight Partners, Index Ventures, Sequoia Capital and Section 32.

is the biggest investor in the biggest generative AI company in the world.

But the tech giant’s interest in generative artificial intelligence precedes the public fervor for AI ushered in by and its model by several years.

鈥淲e were already looking for uses of generative AI before the whole thing exploded,鈥� said t, a partner at , Microsoft鈥檚 venture fund. Stewart spoke with 附近上门 News about the 7-year-old fund鈥檚 investment focus.

Our interview comes at a time when many corporate and strategic venture arms have engaged in a race to invest in the most promising generative AI startups.

Microsoft corporate made a substantial commitment to OpenAI with its first billion-dollar investment in 2019, followed by a $10 billion investment in January 2023 after the launch of GPT 3.5. In total, Microsoft is believed to to OpenAI, which is using the tech giant鈥檚 cloud for its build and model deployment. Microsoft has also integrated OpenAI into , , and Windows.

This is not the only significant investment Microsoft has made in the space. It has also invested in , and in 2023. The software giant鈥檚 stock price this year has risen more than 50% in large part due to the value AI brings to the tech ecosystem.

Microsoft CFO told investors that its partnership with OpenAI and others in this sector would to Microsoft, though she did not specify the time frame.

The moment that drove home the value of this technology for Stewart was not the public launch of OpenAI鈥檚 GPT 3.5 about a year ago. It was earlier in 2022, when connected the power of GPT-3, a prior version, in a highly automated marketing tech platform that got marketers very excited.

鈥淥ur job here is to bring what’s called signal back to Microsoft,鈥� he said. Microsoft is the single limited partner in M12.

The team makes investment decisions independently with a focus on Series A- and B- stage investing. 鈥淭he mandate is to find emerging markets, technologies as they are instantiated in businesses and startups,鈥� Stewart said.

One of those critical investments in AI was the funding it co-led in in April 2022 alongside and , which designs chips that aid with the processing of results or inferences from AI models, alleviating the GPU shortage.

A more recent investment is , a 1-year-old company for enterprise content creation founded by , the previous CPO and CTO at . Typeface announced two fundings in quick succession: its Series A led by in February of this year, and its Series B at a billion-dollar valuation led by 1聽four months later. Parasnis has a vision for enterprise standards using generative AI with respect for data and for the outputs, said Stewart on finding a company that checked all the boxes.

Another portfolio company is . Its founders came from and a conversational platform acquired by . Inworld creates AI-driven characters within gaming environments to create more compelling experiences.

Stewart was an engineer at chipmaker for the better part of a decade with a background in material science and building computers. He joined Applied Materials’ corporate venture arm nine years ago and got hooked on understanding and supporting deep tech founders. Two years ago, he joined M12, where he had built relationships through joint investing, one notable portfolio company was , an edge compute company.

His initial focus at M12 was Web3 and gaming. He navigated opinions about the legitimacy of the value of Web3, he said. Stewart found lots of opportunities on the infrastructure side to invest with Microsoft as a partner to supercharge these early startups.

What M12 looks for

M12 looks for 鈥渁 clear vision that the founder has about this moment we’re in, and what’s on the other side, because that is certainly the cloudiest thing to see through,鈥� he said.

Second, how does a startup make money? Even if a company does not have revenue, the founder can talk through how it will collect value over time.

鈥淭hat element of delight is another key thing I look for,鈥� he said. 鈥淚t’s the difference between me thinking about an application for its peer utility, and then something I pay a lot for.鈥�

Supercharging AI

Earlier this month, Microsoft announced to select startups as well as M12 portfolio companies with the intention to expand the program to other accelerators and startups.

Through that effort, Microsoft gains 鈥渋nsights into the infrastructure needs of early-stage AI companies,鈥� , the company鈥檚 president of commerce and ecosystems, said .

Meanwhile, Microsoft鈥檚 Intelligent Cloud revenue was $24.6 billion, ending Sept. 30, 2023, compared to the same quarter a year ago. Azure and its other cloud services, a part of this division, grew 29%.

Related 附近上门 Pro query

Further reading:

• The Four Developments Propelling AI Forward: A Conversation With General Catalyst鈥檚 Deep Nishar
• A Bessemer Partner On What鈥檚 Driving The Firm鈥檚 Billion-Dollar Bet On AI
• Accel鈥檚 AI Investments Keep The Focus On Applications And Tooling
• Insight Partners Has Invested More Than $4B Into AI. What鈥檚 Next?
• Here鈥檚 How Index Ventures Is Investing In An Era Where 鈥楨very Company Will Have AI鈥櫬�
• Inside Sequoia Capital鈥檚 Growing AI Portfolio
• How Former Googlers鈥� VC Firm Invests In Everything From LLMs To AI Doing Drug Discovery聽

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