Microsoft's IP Ventures

Microsoft's IP Ventures program, through which Microsoft spun out promising but unused technologies into new companies, is a new approach to corporate venture capital. The program provides "IP for equity" and has proven very successful in achieving its main goals—improved morale among researchers who like knowing their technology is being used, improved relationships with the venture capital community particularly in Silicon Valley, and good PR. Many of the eight companies launched so far are doing well. Yet how can the program be scaled beyond its current size, and how can it structure its investments to reduce the dilution that Microsoft invariably faces, given that it does not invest beyond the technology that seeds the company initially?