Microsoft launches Pegasus program for startups, awarding up to $350,000 in credits

Microsoft is extending the Startup Founders Hub, its self-service platform that provides founders with free resources including Azure credits, with a new incubator program called the Pegasus Program.

Pegasus will select startups with products that “fill a market need” and give them up to $350,000 in Azure, GitHub and LinkedIn credits plus backing from advisors, as well as “access to the best Microsoft tech,” according to Hans Yang, general manager at Microsoft for Startups.

“Given the current economic climate, today’s launch of Microsoft for Startups Pegasus Program couldn’t be timelier,” Yang, speaking to TechCrunch via email, said. “In a capital-constrained environment, startups need to demonstrate traction and revenue growth. Startups selling to enterprise companies are challenged with long sales cycles, complex regulatory requirements, and high demands for scalability and reliability. At the same time, enterprise companies know that disruption is coming, but want to work with startups who can meet their rigorous requirements.”

Pegasus is a two-year program, open to startups already active in Microsoft’s Founders Hub and with customer-facing products built on the Microsoft Cloud. A core requirement is having early product-market fit, Yang stressed, including revenue traction, a sales team in place and a “proven” go-to-market model.

“This signals to us that they are ready to go up market to enterprise customers,” Yang added. “Our industry-focused experts, when evaluating potential Pegasus startups, also ensure their solutions are resolving current industry challenges for these sectors. This ensures we provide enterprises with relevant solutions that they can invest in to get a short-term return on investment.”

All startups chosen for Pegasus are assigned a vertical lead to generate sales opportunities and act as an advisor. They also get a success manager, who’s responsible for helping them go to market and “ensure they have the best resources for generating and developing deals.”

Lastly, Pegasus companies receive a dedicated cloud solution architect to support their technical success and facilitate “preferred” access to Azure’s AI offerings. These architects serve as a single point of contact within Pegasus, helping startups engage with Microsoft customers and handling compliance and security checks.

Yang noted that, while Pegasus inherently favors startups built with Azure tech, the program doesn’t lock companies or partners into a particular cloud. They’re able to use multiple clouds, including stalwarts such as Google Cloud and Amazon Web Services, if they so choose, as long as they’re meeting their customers’ needs.

“The program is really driven by the needs of enterprise customers, and while many of our customers enjoy the synergies of leveraging multiple Microsoft solutions together, we are focused on their needs,” Yang said.

There’s no limit to the number of startups that can join Pegasus, but Yang says that special attention will be paid to those in industries like healthcare, AI, retail and cybersecurity. He expressed outsize enthusiasm for generative AI, a particularly hot market at the moment.

“As the AI era takes shape, enterprise companies are looking for ways to embrace generative AI, which presents a tremendous opportunity for startups who can help them on that journey,” Yang said. “Broadly, we believe that every startup, regardless of the industry they serve, should be exploring how they incorporate generative AI into their product roadmap.”

In private preview, Microsoft claims that Pegasus has already supported more than 100 startups whose average deal size exceeded $300,000. In total, it’s pledged over $35 million to those startups in tech credits.

“We’ve been piloting the Pegasus program to refine the matchmaking process, working with business-to-business startups on a daily basis … to identify enterprise customers with a specific need for innovative solutions and connect them with the startups that can address that need,” Yang said. “We help get their products and go-to-market plans enterprise-ready, then take them to market alongside our sales team and directly to enterprise buyers. The results have been promising, with Pegasus startups seeing an average deal size of $350,000 and an active pipeline of over 1,300 opportunities.”

Pegasus complements Microsoft’s various ongoing early-and late-stage startup efforts, including partnerships with VCs and accelerators to back 10,000 companies in Africa over the next five years. The tech giant also maintains the ISV Success Program, a program designed to help early-stage software vendors build and publish apps.