Dan'l Lewin

Microsoft has tried for years to endear itself to the startup community. Now, it is hoping to entice them with a new ploy: free software for three years.

Microsoft today is introducing a new initiative called BizSpark that could offer thousands of dollars worth of software to startups. To qualify, a startup company must receive a recommendation from a venture capital firm, angel investor, university or other entrepreneurial organization in the Microsoft network. The company also must be less than three years old and have less than $1 million in revenue.

The move comes 10 days after Microsoft unveiled its Azure Services Platform, a tactical shift by the software giant to compete more aggressively against Amazon.com, Google and others in online services.

Amazon.com has established a quiet lead in that area, winning over hundreds of startup companies with its Amazon Web Services. Dan’l Lewin, corporate vice president of Strategic and Emerging Business Development at Microsoft, applauded Amazon's "pioneering work" in the cloud computing arena. But he added that BizSpark is a much broader offering.

While Azure will be offered through BizSpark, so will other Microsoft products such as Windows Server, Microsoft SQL Server, Microsoft Office SharePoint Portal Server, BizTalk Server and Systems Center and other software.

Some startups may welcome free software, especially during these tough economic times. However, the move is also likely to spark criticism from open source software advocates and others concerned about Microsoft using its financial power to gain a technological foothold in young companies -- setting the stage for them to become paying Microsoft customers if they succeed.

Lewin said those who join the program are not forced to use Microsoft products exclusively.

"We are committed to interoperability and choice, so to the extent companies want to use any other services or open source in their solution, that is absolutely fine," he said. "We are obviously open to that. We are committed to choice."

When a company leaves the program, a startup must pay an exit fee of $100. They also have the opportunity to move into the normal licensing agreements.

Last year, the software giant introduced a similar offering called the Microsoft Startup Accelerator Program. About 75 companies participate in that offering, which also provides free products, support and marketing.

The Accelerator, which is more selective, will continue, said Lewin. He added that the goal of BizSpark is to have thousands of companies from all over the globe participating.

"What we really want to do is remove all of the friction up front to help accelerate these companies ... very early in their life cycle," he said.

The current economic climate did not drive the new effort, which Lewin said has been in development for some time. But he did say it is good timing to engage with startups in a new way.

We have been aware that the biggest concern in the startup community in working with us has been the upfront costs to get going and the availability and the access to the technology has not been as efficient as it should be," said Lewin. "I think this removes those barriers."

Among the initial network partners that can nominate startups for BizSpark are the National Venture Capital Association, TiE, Founders Co-op and others. Lewin said they have about 200 network partners at launch, with plans to increase that number over time.