Microsoft is among the companies investing $24 million in N-trig, a developer of multitouch technology.
Other investors in the Israeli company include Aurum Ventures, Challenger, Canaan Partners and Evergreen Partners.
A computer equipped with N-trig's DuoSense product can accept input from a pen or a user's finger. It also supports multitouch, so it can recognise simultaneous contact from multiple fingers, enabling gestures such as 'pinching' to reduce the size of an image on a screen, for example. N-trig's technology is used in Dell's Latitude XT and HP's TouchSmart tx2.
Microsoft's next operating system, Windows 7, supports multitouch, and PCs equipped with it and DuoSense may open up new kinds of computing experiences, Microsoft.
N-trig said it plans to use the funding to fuel new technology development and support the creation of new applications.
Microsoft uses touch capabilities in its Surface tabletop computer, but that device employs cameras behind the monitor to register movements. With DuoSense, a thin sensor unit is laid in front of an LCD.
Microsoft's investment in N-trig is in keeping with one of Bill Gates' favourite themes in recent years. Before the software giant's founder shifted most of his time to working for his philanthropic foundation, he spoke often about his hopes for dramatic advances in more natural ways for people to interact with computers. While the keyboard and mouse might always have a certain utility, recently introduced technologies such as the Nintendo Wii, the iPhone and Microsoft's Surface show that new kinds of user interaction can work well, he said in a speech last year.