Zoom seeks to stay ahead of Microsoft with $100m for start-ups

Zoom is setting aside $100m to invest in apps that tie in to its video meeting service, as it races to consolidate its pandemic-year gains and counter a looming threat from Microsoft.

The San Francisco-based company said it would put between $250,000 and $2.5m into each start-up that builds new ways for Zoom users to “meet, communicate and collaborate”.

The investments are also intended to act as a channel for future acquisitions as Zoom looks to extend its own services beyond video meetings, said Kelly Steckelberg, chief financial officer. 

Integrating with a wide range of apps has become a key tactic for Zoom as it seems to embed itself more deeply into the working life of users. These include other collaboration and document-sharing services, such as providing a way for groups of workers to share ideas ahead of meetings and follow up more easily afterwards.

Microsoft has set its sights this year on eating into Zoom’s lead in video meetings, and is counting on the tight integration between its Teams collaboration service and the widely used Office applications to give it an edge.

Referring to the growing threat from Microsoft, Steckelberg said: “Sure, there’s a whole other ecosystem moving out there, but not everybody wants to leverage that ecosystem. We have an amazing customer base that is looking to us for solutions to their challenges and problems.”

Using some of their cash to foster a wider ecosystem of companies around their services has become a familiar tactic for online companies trying to turn themselves into platforms.

Slack, for example, joined a number of venture capital firms in an $80m fund in 2015 that is intended to stimulate a new generation of apps connecting to its workplace messaging service. It also established a directory of apps that linked to its service — a move that echoes Zoom’s announcement six months ago that it would launch a marketplace for apps sometime this year.

Zoom also intends to invest alongside venture capitalists, and does not expect to take the lead in future rounds of investment in promising start-ups beyond the initial seed-stage rounds, Steckelberg said.

Despite linking more closely with a range of other start-ups — among them Zoom, which announced an integration six years ago — Slack was unable to fend off the rising threat from Microsoft and last year bowed to a $29bn acquisition approach from Salesforce, in part to integrate its messaging more tightly with that company’s applications.