Microsoft’s Imagine Cup, a competition for student developers since 2003, is expanding for the first time to early-stage startups whose founders aren’t in school, with $250,000 in cash and $1 million in cloud credits awarded to the winner. The change, announced Monday, opens the competition to companies founded in the past two years that haven’t raised a Series C round, whether or not their founders are students. Startups will compete in six industry categories, including cybersecurity, developer tools and healthcare. Students will get a seventh category of their own, with a $25,000 top prize, or they can choose to compete for the main prize in the industry categories. The Imagine Cup rules for AI usage show the shift: in 2024, entrants had to build their products with “Microsoft and/or OpenAI” services; in 2025, they had to use at least one Microsoft AI service; in 2026, they had to use at least two Microsoft AI services; for 2027, they can use any AI they want, as long as they use Microsoft’s Azure cloud. Tom Davis, general manager of Microsoft for Startups, said AI is letting more founders start companies faster than ever, and the revamped competition is meant to help those young companies win customers and prepare to sell to big businesses. Under the new rules, final-round judges will look for net revenue retention over the previous 12 m