💰Microsoft’s VC arm, explained

PLUS: RVs are flying off shelves. September 14, 2021 [The Hustle] [The Hustle]( Calling all Canadians: A TikToker trading her way from a bobby pin to a house recently swapped the rights to a year’s worth of unlimited Chipotle for a $40k trailer cabin. But for legal reasons, she can’t get it out of Canada -- and she’s now looking to make a trade there. Today’s rundown: - M12: Here’s one way Microsoft spends its $130B pile of cash. - Chart: RVs are flying off the shelves. - Five-Dollar Store? Dollar General’s new format is poppin’. Let’s do it. The big idea [Microsoft dangling cash] Meet M12: Microsoft’s venture capital arm Other than “Do we need a beer pong table?,” one of the most common questions that a corporation asks is “What do we do with our cash”? The team at Microsoft asks that question while looking at a money pile that now clocks in at an absurd [~$130B](. One way Microsoft deploys the cash... … is via its venture arm M12 According to [Crunchbase](, M12 was launched in 2016 and -- investing only Microsoft’s money -- has done 107 deals. Here are the rules it currently runs by: - Financial returns: While some corporate VC firms may acquire startups for strategic reasons, Microsoft is focused on achieving a high return. - Clean term sheets: Microsoft puts almost no restrictions on its investments (it used to include a “right of first” term that allowed it to buy out the startup first, but no longer does). - Main investor: Microsoft is leading more investment rounds (and it’s increased its check size to $20m vs. $10m in the first 3 years) Startups benefit from the Microsoft machine M12 invests in cutting-edge technology across industries from biotech to robotics to productivity to cybersecurity. Per Crunchbase, a startup that receives a check gets “Microsoft muscle” behind it, including: - Buying the startup’s services - Integrating the technology into Microsoft’s existing ecosystem (Azure, Office) Microsoft isn’t the only Big Tech VC Google (GV), Salesforce (Salesforce Ventures), Qualcomm (Qualcomm Ventures), and Intel (Intel Capital) have all done more deals than M12 in the past 5 years. With a $2.2T market cap, it’s also hard for a VC deal to move the needle. To date, M12 has invested in 13 unicorns ($1B+ valuation). 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[Personalize Your Snippets]( Charted [RV Sales chart]( Zachary Crockett / The Hustle RVs are flying off the shelves RV sales in the US are expected to grow [34%]( this year, per the RV Industry Association. The association projects that 600k RVs will be sold in 2022, up from 140k units 40 years ago. The second-hand RV market is no less bountiful: Outdoorsy, which capitalizes on the [17m+]( North American RVs that sit unused for 95% of the year, raised [$120m]( in June. We’re curious: Are we the only ones who remember the movie RV with Robin Williams, JoJo, and Josh Hutcherson? Seems relevant right about now. [Share on Facebook]( [Share on Twitter]( [Send as email to a friend](mailto:?subject=The%20Hustle%20wrote%20something%20I%20think%20you%27ll%20like...%0A&body=RVs+are+flying+off+the+shelves%0Ahttps%3A%2F%2Fthehustle.co%2F09142021-RV-sales%3Futm_campaign%3DMicrosoft%2BVC%2Barm%26utm_content%3D09142021-RV-sales%26utm_medium%3Demail%26utm_source%3Ddaily%0A%0AYou%20can%20subscribe%20with%20my%20link%20here%20to%20get%20the%20latest%20in%20tech%20and%20business%20daily:%0A [View on our website]( Brick and Mortar [Popshelf]( Dollar General wants to go upmarket with Popshelf. So far, it’s working. While other retailers were shuttering during the pandemic, Dollar General bucked the trend by [launching]( an entirely new store format. Popshelf is targeted toward suburban women with household income between $50k and $125k and primarily offers items for $5 or less across a range of categories, including: - Seasonal and home decor - Health and beauty - Cleaning supplies - Party goods The concept has been likened to Five Below for adults… … and so far, results are promising. Dollar General opened 8 Popshelf stores between October 2020 and May 2021, with impressive metrics across the board: - Annualized sales ranged from $1.7m to $2m per store, compared with $1.4m for first-year sales at a standard Dollar General - Gross margin is ~40%, 8 points higher than a traditional Dollar General - Promoter scores have climbed into the 80%-90% range, a rarity in retail This early success has led to aggressive growth plans The top brass at Dollar General sees an opportunity to open 3k Popshelf stores nationwide, but one challenge may lie in the store format. Executives have hinted that some Popshelf locations may be opened as a “shop-in-shop” within traditional Dollar General stores, which some analysts believe could tarnish the Popshelf brand. To learn more about the economics of Dollar General and its competitors, check out our [visual explainer](. [Share on Facebook]( [Share on Twitter]( [Send as email to a friend](mailto:?subject=The%20Hustle%20wrote%20something%20I%20think%20you%27ll%20like...%0A&body=Dollar+General+wants+to+go+upmarket+with+Popshelf.+So+far%2C+it%E2%80%99s+working.%0Ahttps%3A%2F%2Fthehustle.co%2F09142021-Popshelf%3Futm_campaign%3DMicrosoft%2BVC%2Barm%26utm_content%3D09142021-Popshelf%26utm_medium%3Demail%26utm_source%3Ddaily%0A%0AYou%20can%20subscribe%20with%20my%20link%20here%20to%20get%20the%20latest%20in%20tech%20and%20business%20daily:%0A [View on our website]( TRENDS Over in the [Trends]( Facebook group, 15k+ members of the Trends community connect every day and discuss new ideas, opportunities, and challenges. They also let us know when they’re hiring, so here’s a few cool gigs you may be interested in: - [JUICE]( is looking to hire for several high-level positions. If you’re a beast at pulverizing media ads and ecommerce strategy -- this one’s for you. They need creative types, strategy types, and more. (👀 Looks for a way to squeeze in a pulp joke. Fails.) - [Endurance Tap Inc.]( is seeking a curious Padawan eager to learn all things business as a Jr. Growth and Ops Manager. - [Italic]( is seeking a talented product designer to work a little Extreme Home Makeover on its overall digital experience and storefront. If you want your company’s jobs shared with 1.5m+ bada** people (like yourself), we prioritize Trends members. [Join us](! [Get Access →]( AROUND THE WEB 🇺🇸 On this day: In 1814, Francis Scott Key [wrote]( the poem “The Star-Spangled Banner” based on a flag he saw flying over Fort McHenry in Maryland during the War of 1812. It would not become the US’s national anthem until 1931. 🤑 Wow: They say insanity is doing the same thing repeatedly, expecting a different result. Unless you’re [this woman](, who won $1.2m after playing the same numbers in the lottery for a year. 🐕 Haha: The International Cricket Council [named]( a dog “player of the month” after he interrupted a women’s cricket match by [snagging]( the ball. 🎖️ How to: It’s crunchtime, but you don’t want to burn out your team. Harvard Business Review [studied]( US Army leaders for top tips. 🏈 That’s cool: The Carolina Panthers have a new [mixed-reality panther]( that leaped throughout the stadium for the team’s home opener. 🦉 Wild story: These were the [top picks]( for the Bird Photographer of the Year, a prize that ultimately went to Alejandro Prieto’s picture of a roadrunner at the US-Mexico border wall. Meme of the day [RV meme] Is this even camping? 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