Interview: Rahul Sood

Rahul Sood, until last week the general manager of Microsoft Ventures, the corporate venturing subsidiary of software producer Microsoft, left his role to scratch an entrepreneurial itch, and has already received interest from corporate investors in his new venture.  

Sood revealed last week that he was leaving Microsoft Ventures, which he helped to form in June 2013, in order to found a start-up company called Unikrn. Unikrn is still in stealth and, though Sood did not disclose what it involves, he did say “it involves a number of different things,” in the gaming sector and hinted it may not involve game development.

“I had an itch to go back to being an entrepreneur again, and I have always been in the gaming space,” he told Global Corporate Venturing. “I have always had a personal interest and I felt like now Microsoft Ventures was up and running and everything was going well, the time was right to jump out and create something.”

Sood originally joined Microsoft in 2010, before launching the company’s early-stage Bing Fund in 2012 as general manager. When Bing Fund merged with Microsoft’s incubator and accelerator activities the following year, he retained his position as it moved from direct investment to a more holistic approach.

“We basically took the money we put into single start-ups and invested it back into accelerators and programmes that allowed us to connect the start-ups to customers because we thought that would be more valuable to them than a cheque,” Sood said.

“By doing that, we saw an increase in the number of companies getting funded, because they had significantly more attraction. We thought that was the better avenue to go into and it worked.”

Right now Sood is working on Unikrn at WeWork, a co-working space in Seattle in which Microsoft retains an area to help start-ups and entrepreneurs.

Prospective strategic investors from businesses covering gaming platforms and cloud computing have been in touch, but Sood maintained that he is not looking to raise cash right now, though the funding process could be brought forward depending on timing and the ability of the investors to help.

“I have learned after working with hundreds of companies in accelerators that there is a way to raise money and it is not going out and finding who will throw cash at you, it’s about finding the right strategic investors and ensuring those people are going to add value and doing it at the right time,” he said.

“Being able to time our investment is really important to me. Right now we are just taking enquiries, and there are quite a few, so that is good to see.”

Before joining Microsoft, Sood was the founder of luxury computer producer VoodooPC, which was acquired by Hewlett Packard in 2006. Although he is familiar with building a business, Sood said working with a strategic investor had given him added perspective on the process.

“The way we designed Microsoft Ventures was to be as entrepreneur-friendly as possible and not put onerous demands on the entrepreneur,” he explained. “You have to be super careful when you are taking corporate investment from a strategic investor.

“At the same time, depending on what stage your company is at, finding the right people who can add value is really important. They say that money doesn’t grow on trees, but when you have a great idea and a great team money does tend to grow on trees, and you just do not want to take money from everybody.”

As has been shown by the high-profile acquisitions of virtual reality headset developer Oculus VR and game footage streaming site Twitch in recent months, the gaming sector is ripe for establishing a business right now.

Sood explained that there are two main reasons for this, the first being the growth of gaming as a passive entertainment form, like sport, and for some even a profession, which expands the range of ancillary business models.

“The other thing is we are seeing the cost of devices come down,” he added. “There is a company called Razer that did a great job creating a super awesome thin and light gaming notebook that kind of took over where VoodooPC left off.

“Now you are seeing companies like Lenovo or HP come into that space as well with their versions of gaming notebooks, with very aggressive pricing. I think desktop computers are going down and this new category of notebooks that are thin and light with high performance are coming up.

“For me, it is a really good time to build this company. We aren’t talking too much about it but it is in the gaming space and it involves a number of different things. It will be fun to see what happens with it.”