Inspired by TechCrunch’s “Is Seattle Silicon Valley’s Next Favorite Stop?“, for this post we can thank guest contributor Kevin Crosby, an Amazonian, General Assembly instructor, and startup enthusiast. For detail on Seattle-specific investments in 2014, check out this blog, and for an overview of the angel scene, look no further than this annual post.
2014 Investments and Investors
A quick summary below shows the number of deals by top 10 investors and the segments driving Seattle. Notably, the top 10 investors include VCs, angels, angel groups, and accelerators. Following is an overview of the capital providers, noting that Madrona’s 2015 numbers exclude its investments in Techstars and the Alliance of Angels.
Angels
Founder’s Co-op led the charge with their commitment to the Cascadia region, and wrote 13 checks to Seattle startups in 2014. The team, led by some of Seattle’s top angels, notably Chris Devore, Andy Sack, and Rudy Gadre, has raised over $30M and invested in nearly 50 companies with 11 acquisitions. Both Founder’s Co-op and Techstars leverage UW’s Startup Hall, to build their early stage companies. The Alliance of Angels also has a primarily local focus, and with 20 deals in 2014 overall, it’s likely that the reported figure of 10 under-represents the total (follow-on rounds and convertible notes were likely under the radar). Note too that the Alliance of Angels also raised a $5M fund in 2015 to continue investing in early-staged deals. Organizations such as Keiretsu enable direct investments via individual investors rather than a fund of angel capital (more on 9 such local groups here). Some of the interesting areas for angels in 2014 were in enterprise software platforms and developer tools such as Remitly, Socrata, Algorithmia and PlayFab. Other notables were in EdTech sector such as Dreambox Learning, and in the Home Improvement Services for Porch and Pro, and Gratafy in mobile commerce.
Source: AngelList
Accelerators
Seattle has also seen a proliferation of early-stage accelerators aimed at taking pre-product companies through initial seed funding, and prepare them for early-stage venture deals. 9Mile’s focus on enterprise businesses on its 4th cohort has 1 acquisition to date. Comparatively,Techstars’ broader focus to consumer and B2B has funded 50 companies with $106M with 36 still active and 8 acquisitions. Microsoft Ventures is also scaling their accelerator program, and invested an average of $867K in 41 companies and 1 acquisition.
VCs
The Seattle Venture Capital community has uniquely carved out investment segments specific to their expertise, yet creates wonderful syndicates to scale their companies. Madrona has the most breadth in investment recently with nearly $1B in AUM to invest in early stage businesses. As noted in GeekWire’s article about Madrona, the firm’s syndicates generated 3.5x incremental investment for every dollar Madrona invested into Northwest startups, which was across 26 rounds in the Puget Sound. In comparison, Maveron follows a strict consumer-only investment thesis with emphasis in internet / ecommerce. However, in many cases overlap enables some unique Seattle syndicates, such as Pro.com with Madrona, Maveron, Bezos Expeditions, and Andreesen Horowitz or Context Relevant (Big Data and predictive analytics) with Vulcan Capital, Madrona, and Goldman Sachs.
Sources: Crunchbase, CB Insights, Company Websites
Take-aways
External VC funding into Seattle-based startups increased in 2014, and local VC’s play a key role in cultivating these syndicates. Local investors are critical to early-stage startup success, and increased external capital for later-stage rounds solidifies our position on the global map and brings much-needed significant capital.
