M12, Microsoft's Venture Fund

Hermes has been downloaded 22 million times since February. For most open-source AI assistants, viral adoption among developers ends the story. For Nous Research, it's the beginning. The real test: can adoption translate to enterprise scale? M12 Managing Partner Peter Lenke, CFA frames what most investors miss — it's not volume. It's security, governance, scale, and trust. Nous raised $90 million at a $1.5 billion valuation to close that gap. Peter spoke with Yuliya Chernova at The Wall Street Journal about what separates developer enthusiasm from enterprise readiness. Read here: https://lnkd.in/gNUPMXNN Congratulations to Hervé Bizira, Dillon Rolnick and the Nous Research team.

Join us Tuesday at Okta HQ for a conversation on selling to the public sector, with operators and buyers who have worked through those deals firsthand.

Next week at #SFTechWeek, Microsoft and Ask a Chief of Staff are hosting two sessions for operators leading AI adoption, including an interactive session where Chiefs of Staff bring business problems to Microsoft data scientists.

As AI workloads scale, so do the demands on data centers, and a growing question is whether facilities can become intelligent enough to dynamically manage power, cooling, capacity, and operational complexity. Startups like etalytics are applying AI to that challenge. As part of #SFTechWeek, M12, NVIDIA, and etalytics are hosting The AI Power Crunch: Energy, Compute and the Race to Scale AI. M12 Managing Partner Michael Stewart joins Scott Wallace of NVIDIA and Niklas Panten of etalytics for a panel on how much useful compute can be delivered from every megawatt. October 6, 6:00 PM. RSVP here: https://lnkd.in/e9WGcNFT

M12, Microsoft's Venture Fund does NOT want to invest in companies simply solving Microsoft's problems today. They want founders solving the problems Microsoft will care about tomorrow. I sat down with the absolute legend Michael Stewart, Managing Partner at M12, and there were so many great lessons for founders and investors. My 7 biggest takeaways 👇 1. Startups Thrive in the Gap Michael looks for the gap between: What technology makes possible vs. What large companies are currently capable of doing. His line: “Startups thrive inside that gap.” The best founders see the gap before everyone else does. 2. Speed Is One of the Clearest Founder Signals When M12 invested in Fastino, Michael saw a team that could: - Recognize a problem - Jump straight into it - Ship incredibly quickly They had working technology roughly a year before Michael saw others doing something similar. Founder takeaway: Velocity compounds. 3. Don't Pitch Today's Microsoft Problem Michael said M12 is looking for “future unanswered problems.” If you're pitching M12, don't just arrive with something Microsoft already knows it needs. Show them a future where Microsoft could fundamentally accelerate your company. 4. The Best AI Products May Not Give You Answers Most of Silicon Valley loves information. More research. More context. More data. But most people don't want information. They want the problem solved. The future may be: Problem → AI → Done 5. AI Gaming Is Massively Underappreciated Business AI has one brutal constraint: It has to be right. Entertainment has a different benchmark: Was it delightful? Was it surprising? Was it fun? Michael thinks gaming could become one of the most interesting places to push AI forward. 6. Great VCs Don't Just “Sound Like VCs” Michael's advice here was fantastic. The best investors have genuine, almost obsessive curiosity about what founders are building. Founders can tell when you've actually spent years thinking about the future they're building. And they can tell when you read the company summary 5 minutes before the meeting. 7. M12 Is Thinking About the Billions of People Who Aren't AI Power Users Their thesis isn't simply: “Invest in AI.” It's: What has to happen for AI to become useful to billions of everyday people? Michael breaks that down into things like: - Cost - Distribution - Data - Infrastructure - Devices The biggest opportunity may not be another AI application. It may be removing one of the bottlenecks preventing AI from reaching everyone. Fantastic conversation. Full episode with Michael Stewart, Managing Partner at M12: https://lnkd.in/gBHruyBv

How do you know an AI agent is actually improving, not just getting better at the test? At the AI Infra Summit, M12 Managing Partner Michael Stewart joined AI21 Labs Co-Founder and Co-CEO Ori Goshen on the main stage to talk about optimizing AI agents for enterprise. For Michael, evals are the bottleneck. Models churn and tasks drift, so optimization has to be continuous. Held-out regression gates help catch problems before they ship, and live production traffic and frozen eval sets tell teams different things. His broader point: model choice matters more than it looks, and selecting and validating the right model is where the real work is. #AIInfraSummit

The days of token-maxing are behind us. Enterprises now expect the same ROI discipline from AI spend that they'd apply to any SaaS deal. On the Venture with Grace podcast, Cheryl Cheng told Grace Gong that founders shouldn't be caught off guard by that bar. Investing in AI isn't the differentiator anymore. Proving it pays off is. https://lnkd.in/gMzARHDv

Todd Graham says the industry has waited long enough on agentic security. If you're pitching in this space, his message is blunt: you might be thinking too small. The M12 Managing Partner told The Register he's seeing many companies solving only a sliver of the problem. His read on what wins instead: "I truly believe someone is going to build the next Okta, just as SaaS generated Okta." More in The Register via Jessica Lyons: https://lnkd.in/eBM-NaPF

This summer, 676 human forecasters competed in the Metaculus Cup. An AI system beat all of them, along with every other AI competitor in the field, including calling Colombia's presidential race before the human forecasting community did. That system is Mantic, a London-based startup building AI that reasons past consensus instead of following it. Geopolitical shocks and supply chain disruptions are reshaping markets and decisions faster than ever, making the ability to see around corners more necessary than ever. We're glad to participate in Mantic's $25 million seed round, joining founders Toby Shevlane and Ben Day and the entire Mantic team on what comes next. Read the full story in an exclusive from Reuters in the comments.