Microsoft's strategy toward venture investing these days can be summed up in a word: Don't.

After making several venture capital investments in the 1990s, the Redmond, Wash.-based behemoth now largely eschews taking equity stakes in start-ups, according to Dan'l Lewin, corporate vice president of .Net business development at Microsoft and the company's point person in Silicon Valley. Currently, Microsoft has investments in only about three or four small companies, he said. One is Groove Networks, founded by Lotus Notes creator Ray Ozzie. Microsoft also recently placed $1 million with Nanochip, which is concocting a new type of nonvolatile memory. That level of investment is "insignificant. It is more the exception than the rule," Lewin said during a meeting with reporters, adding that the company made a "meaningful number" of investments in the past. Information on Microsoft's investor relations Web site underscores the change. Between 1996 and 1998, the company made about 11 investments a year in start-ups and in established companies such as Apple Computer. In 1999, the number shot up to 39, and the following year reached 41. But in 2002 and 2003, only one investment was made each year. Instead, the company tries to bootstrap rising stars by providing technical support and marketing help. The shift, which started in 2000, mixes diplomacy and practicality. Venture investments can bring potential conflicts of interest. Start-ups can feel compelled to disclose intellectual property prematurely, and the funding can lead to discord in existing partnerships. Besides, the amount Microsoft or other large companies contribute through their venture programs can be insignificant over the long run.