Madrona Venture Group has raised greater than $500 million in contemporary capital that the 25-year-old Seattle enterprise capital agency will use to bankroll each early and later-stage startups. It marks the agency’s largest fundraising effort.
Madrona reeled in $345 million for its eighth fund — cash that it’ll use to put money into 35-to-40 Pacific Northwest tech startups over the following a number of years. It additionally raised $161 million for its second “Acceleration Fund,” designed for extra mature corporations positioned throughout North America.
The contemporary capital comes on the heels of Madrona’s $300 million seventh fund raised in 2018, and $100 million raised final yr for the inaugural acceleration fund.
The new funds mirror Madrona’s continued guess on the rising Pacific Northwest tech ecosystem, in addition to the fruits of returns from investments in corporations comparable to Accolade, Redfin, Snowflake, Heptio, Xnor.ai, Lattice Data, and a flurry of others.
“It highlights just how much recognition there is that Seattle is a place to birth companies and to start companies, but also a ‘Seattle mindset’ in terms of helping build companies at any stage,” stated Madrona Managing Director Matt McIlwain.
Earlier reviews on the brand new funds — based mostly on SEC filings launched this week — didn’t element Madrona’s full fundraising efforts. GeekWire caught up with McIlwain on Wednesday to get extra particulars.
Even as Madrona more and more makes bets on later-stage corporations past the Pacific Northwest, McIlwain stated it’s nonetheless very a lot dedicated to backing smaller corporations in its yard.
“We’re tripling down on that core thesis we’ve believed in for 25 years,” he stated.
More than 90% of investments made out of Madrona’s seventh fund have gone towards seed and Series A offers. McIlwain stated the agency has invested lower than half of the seventh fund thus far, partly as a result of it reserves capital to help portfolio corporations as they develop.
Madrona will look to make investments starting from $500,000 to $8 million out of the eighth core fund, and from $8 to $12 million for the second acceleration fund.
McIlwain described the acceleration fund as “additive.” He stated it leverages each Madrona’s personal expertise partnering with massive corporations comparable to Smartsheet and Impinj from their earliest days, in addition to the collective neighborhood expertise and information from its companions within the Seattle ecosystem.
That contains tech giants comparable to Microsoft and Amazon — Madrona co-founder Tom Alberg was an early investor within the retail and cloud computing behemoth — in addition to its partnerships with the University of Washington’s pc science college and the Allen Institute of Artificial Intelligence (AI2).
Madrona has confirmed its skill to again nascent startups that turn out to be enormous corporations. Its monitor document for investing in later-stage corporations for the primary time, particularly these outdoors of its yard, shouldn’t be but as clear. Recent investments out of the acceleration fund embrace corporations comparable to VNDLY; Clari; and Coda.
Madrona will proceed following its core funding themes that embrace the intersection of machine studying and life sciences; next-generation software program infrastructure; low-code or no-code platforms; the digital transformation of shopper experiences; “intelligent applications;” and “the future of work.”
The $345 milion fund is likely one of the largest capital raises for any Pacific Northwest enterprise agency, and supplies extra early-stage funding for a area often criticized for its lack of funding choices.
Madrona is almost synonymous with Seattle’s enterprise capital scene — a powerhouse so sturdy that some entrepreneurs fret over the affect it holds as a funding gatekeeper.
“We’re super curious and we’ll meet with really anyone. We love taking first meetings,” McIlwain stated. “We view it as our job to add value to any company and any entrepreneurial team that wants to take the time to meet with us.”
In latest years Madrona has confronted extra competitors on offers from newer corporations comparable to Flying Fish Partners and Pioneer Square Labs — co-founded by former longtime Madrona managing director Greg Gottesman. Out-of-town traders are also extra often investing in Seattle-area startups.
“It is good for the region to not only have diverse sources of capital, but people that are really willing to roll up their sleeves and add value with you from day one,” McIlwain stated. “The more of that, that is focused on companies that are based in Seattle and the Pacific Northwest, the better.”
Startups in Seattle are elevating gobs of cash as of late. Venture capital traders sunk $1.1 billion throughout 65 offers in the course of the third quarter, based on GeekWire’s tally, derived from our operating checklist of Pacific Northwest startup investments. Funding totals from July and August eclipsed final yr’s ranges.
While Seattle nonetheless stays far behind Silicon Valley, New York, Boston, and Los Angeles in complete capital raised, the deal exercise is garnering nationwide consideration. The Wall Street Journal this summer time highlighted the Emerald City with this headline: “Venture Capitalists Target Seattle as Startup Ecosystem Grows.”
The Seattle space is now dwelling to 10 unicorn startups valued at $1 billion. Eight of the ten corporations have achieved their lofty valuations previously 18 months, and 5 years in the past, there have been no unicorns within the area.
Madrona is an investor in simply a type of unicorns: Cloud storage firm Qumulo.
In latest years, Madrona has strengthened its managing director lineup, including skilled tech leaders comparable to S. “Soma” Somasegar, a longtime Microsoft exec; Hope Cochran, a former CFO of King Digital; and Steve Singh, former CEO of Concur and Docker.
Madrona additionally continues to assist help Madrona Venture Labs, a startup studio it launched in 2014. MVL raised its personal third fund final yr and has spun out a number of corporations this yr.
Investors within the new funds are largely people who have beforehand participated in previous funds — endowments, universities, foundations, massive household places of work, and excessive web value people.
U.S enterprise capital fundraising hit a document excessive this yr, reaching $69.1 billion as of Nov. 20, based on PitchBook. But whereas total funding is up, the variety of corporations that raised funds has fallen by round 50%.