Madrona expands geographic reach and targets later-stage deals with $100M ‘acceleration fund’

Madrona expands geographic reach and targets later-stage deals with $100M ‘acceleration fund’

2:36pm, 1st May, 2019
Madrona managing directors, from left to right: Tom Alberg, S. “Soma” Somasegar, Scott Jacobson, Matt McIlwain, Tim Porter, Hope Cochran, and Len Jordan. (Paul Goodrich is Madrona’s other managing director) (Madrona Photo) Call it the “ones we missed” fund. has raised $100 million for what it calls an “acceleration fund.” The Seattle firm, which has focused on early-stage deals across the Pacific Northwest throughout its 24-year history, will target later-stage companies based across the country with the new investing vehicle. But it is also targeting deals in its Seattle backyard that slipped through the cracks. Madrona is one of Seattle’s most successful early-stage startup investors — with recent successes such as Apptio, Smartsheet and Redfin under its belt. But even so, Madrona’s Matt McIlwain admits that the firm missed some opportunities, pointing to fast-growing Seattle startups such as Outreach, Auth0, Icertis, and Textio. “It’s fair to say that there are some great Seattle companies that we didn’t get right early on,” McIlwain said. The new fund frees up Madrona to participate in later rounds for more mature companies both in and out of the Pacific Northwest. Madrona began thinking about this new strategy last fall, just after it $300 million for its seventh fund. The venture capital firm had dabbled with later-stage deals, investing in more established companies based outside of Seattle such as , Tigera, and over the past few years. Matt McIlwain. (Madrona Photo) “We’ve done some of those, but very selectively,” McIlwain told GeekWire. “We wanted to have a dedicated fund and a dedicated focus on that acceleration stage.” He described that stage as when a company has already found product market fit and is “really starting to accelerate the growth of the business.” Best known as an early-stage investor — including an insightful gamble on Amazon in the 1990s by partner Tom Alberg — the acceleration fund represents a new strategy for the firm. But it is one that other firms have experimented with, though the approach of investing across stages of company formation has not always worked in the topsy turvy world of venture capital. (Madrona Image) Madrona will be “super selective” with the acceleration fund, with plans to make six-to-nine investments over a three-year span, McIlwain said. The average check size will range from $7 to $10 million. If all goes to plan, Madrona could raise another acceleration fund when it starts planning for its eighth traditional “core fund.” Madrona’s existing investors provided the capital for the acceleration fund. The firm remains committed to making early-stage investments in Pacific Northwest startups via its traditional fund. Madrona prides itself on planting seeds in companies from “Day 1” and sticking with them throughout a journey to acquisition or an IPO — Smartsheet, Impinj, and Redfin are examples of those investments. “We love our core strategy,” McIlwain said. “Nothing is changing there.” In fact, cash from the acceleration fund could very well go toward additional Seattle companies. “We are more committed to this region than ever,” McIlwain said. He noted Madrona’s partnerships with organizations including Techstars Seattle and the University of Washington, and said the firm’s new founder center, , has been “incredibly successful.” Madrona employs 30 people at the firm and has been bulking up its lineup, adding and over the past year. The same team will be working with both funds — this could help Madrona avoid issues that plagued Kleiner Perkins Caufield & Byers, which dealt with internal rifts after establishing a “growth” fund in 2010 to compliment its early-stage fund. “Our approach is very different,” McIlwain said when asked about last month’s Kleiner Perkins story in . “A unified team, unified process and consistent fund economics across the firm along with our collaborative approach will allow us to bring the full Madrona team’s value-add to all our companies across all our funds.” A staircase connects Madrona Venture Group’s existing office to Create33, a new founder center that aims to be an epicenter for Seattle startups. (GeekWire Photo / Taylor Soper) Madrona is facing increased competition from Silicon Valley firms that are . Recent investors in later stage rounds for companies such as Outreach and Auth0 include Mayfield, Spark Capital, Trinity Ventures, and Meritech Capital. McIlwain said he welcomes the new entrants in the Seattle market. “It is great for the Seattle ecosystem to have more investors partnering with great entrepreneurs and investors like Madrona to build global-leading companies,” he said. Madrona has proven its ability to back nascent startups that become huge companies. Its track record for investing in later-stage companies for the first time, especially those outside of its backyard, is not as clear. The firm hopes to use its hometown as an advantage. “And, we believe, it is essential to have the ‘Seattle Perspective’ as part of your team to accelerate growth and maximize long-term value,” it wrote in a blog post today. McIlwain said that perspective includes proximity to homegrown companies such as Amazon and Microsoft, and the cutting-edge technologies being developed across the city in industries such as cloud computing, machine learning, and artificial intelligence. Madrona believes it can make a difference for companies not familiar with the Seattle tech scene. “It’s the access to the insights from those domains; access to the innovators both in small and big companies we’ve had the opportunity to work with; and this whole area of a cultural approach that really values taking a trust-based, long-term style to company building,” McIlwain said. In addition to Create 33, other Madrona-related initiatives include , the “startup studio” backed by Madrona. Recent investments made by the firm include deals backing Igneous, Ovation, Knock, Polly, Pro.com, and Clusterone.
Madrona raises new $100M ‘acceleration fund’ to expand geographic reach, target later-stage deals

Madrona raises new $100M ‘acceleration fund’ to expand geographic reach, target later-stage deals

2:05pm, 1st May, 2019
Madrona managing directors, from left to right: Tom Alberg, S. “Soma” Somasegar, Scott Jacobson, Matt McIlwain, Tim Porter, Hope Cochran, and Len Jordan. (Paul Goodrich is Madrona’s other managing director) (Madrona Photo) Call it the “ones we missed” fund. has raised $100 million for what it calls an “acceleration fund.” The Seattle firm, which has focused on early-stage deals across the Pacific Northwest throughout its 24-year history, will target later-stage companies based across the country with the new investing vehicle. Madrona began thinking about this new strategy last fall, just after it $300 million for its seventh fund. The venture capital firm had dabbled with later-stage deals, investing in more established companies based outside of Seattle such as , Tigera, and over the past few years. Matt McIlwain. (Madrona Photo) “We’ve done some of those, but very selectively,” said Madrona Managing Director Matt McIlwain. “We wanted to have a dedicated fund and a dedicated focus on that acceleration stage.” In an interview with GeekWire, McIlwain described this stage as when a company has already found product market fit and is “really starting to accelerate the growth of the business.” “This fund is focused on Madrona making new investments in companies for the first time in that acceleration stage, not only in Seattle but across the West Coast and the country,” McIlwain said. The longtime Madrona director admitted that the firm has missed out on investing in some companies early, pointing to fast-growing Seattle startups such as Outreach, Auth0, Icertis, and Textio. The new fund frees up Madrona to participate in later rounds for more mature companies both in and out of the Pacific Northwest. “It’s fair to say that there are some great Seattle companies that we didn’t get right early on,” McIlwain said. “If it makes sense to be able to add some complimentary value to the other folks on the syndicate, we’d love to be thought of as a group that can do that. “Madrona has been known for being the seed and Series A group,” he added. “This helps communicate that we could lead or partner in a B or C round with other great investors and entrepreneurs.” (Madrona Image) Madrona will be “super selective” with the acceleration fund, with plans to make six-to-nine investments over a three-year span, McIlwain said. The average check size will range from $7 to $10 million. If all goes to plan, Madrona could raise another acceleration fund when it starts planning for its eighth traditional “core fund.” Madrona’s existing investors provided the capital for the acceleration fund. The firm remains committed to making early-stage investments in Pacific Northwest startups via its traditional fund. Madrona prides itself on planting seeds in companies from “Day 1” and sticking with them throughout a journey to acquisition or an IPO — Smartsheet, Impinj, and Redfin are examples of those investments. “We love our core strategy,” McIlwain said. “Nothing is changing there.” In fact, cash from the acceleration fund could very well go toward additional Seattle companies. “We are more committed to this region than ever,” McIlwain said. He noted Madrona’s partnerships with organizations including Techstars Seattle and the University of Washington, and said the firm’s new founder center, , has been “incredibly successful.” Madrona employs 30 people at the firm and has been bulking up its lineup, adding and over the past year. The same team will be working with both funds — this could help Madrona avoid issues that plagued Kleiner Perkins Caufield & Byers, which dealt with internal rifts after establishing a “growth” fund in 2010 to compliment its early-stage fund. “Our approach is very different,” McIlwain said when asked about last month’s Kleiner Perkins story in . “A unified team, unified process and consistent fund economics across the firm along with our collaborative approach will allow us to bring the full Madrona team’s value-add to all our companies across all our funds.” A staircase connects Madrona Venture Group’s existing office to Create33, a new founder center that aims to be an epicenter for Seattle startups. (GeekWire Photo / Taylor Soper) Madrona is facing increased competition from Silicon Valley firms that are . Recent investors in later stage rounds for companies such as Outreach and Auth0 include Mayfield, Spark Capital, Trinity Ventures, and Meritech Capital. McIlwain said he welcomes the new entrants in the Seattle market. “It is great for the Seattle ecosystem to have more investors partnering with great entrepreneurs and investors like Madrona to build global-leading companies,” he said. Madrona has proven its ability to back nascent startups that become huge companies. Its track record for investing in later-stage companies for the first time, especially those outside of its backyard, is not as clear. The firm hopes to use its hometown as an advantage. “And, we believe, it is essential to have the ‘Seattle Perspective’ as part of your team to accelerate growth and maximize long-term value,” it wrote in a blog post today. McIlwain said that perspective includes proximity to homegrown companies such as Amazon and Microsoft, and the cutting-edge technologies being developed across the city in industries such as cloud computing, machine learning, and artificial intelligence. Madrona believes it can make a difference for companies not familiar with the Seattle tech scene. “It’s the access to the insights from those domains; access to the innovators both in small and big companies we’ve had the opportunity to work with; and this whole area of a cultural approach that really values taking a trust-based, long-term style to company building,” McIlwain said. In addition to Create 33, other Madrona-related initiatives include , the “startup studio” backed by Madrona. Recent investments made by the firm include deals backing Igneous, Ovation, Knock, Polly, Pro.com, and Clusterone.
More cash for Pacific Northwest startups: Founders’ Co-op raises $25M fund, its largest ever

More cash for Pacific Northwest startups: Founders’ Co-op raises $25M fund, its largest ever

10:15am, 15th April, 2019
Founders’ Co-op Managing Partners Chris DeVore and Aviel Ginzburg. (Founders’ Co-op Photo) More investment dollars are flowing into the Pacific Northwest startup ecosystem thanks to a new fund from . The Seattle-based early-stage venture capital firm just closed a $25 million fund, its fourth and largest ever since launching in 2008. Founders’ Co-op will follow the same playbook it has used in years past: being the first institutional check and anchor tenant in the seed round for companies it bankrolls. The firm focuses on writing checks in the $250,000-to-$750,000 range for budding startups across the Pacific Northwest. It has backed more than 90 startups, including companies such as Remitly, Outreach, Auth0, Crowd Cow, Apptentive, and others. Those companies have collectively gone on to raise more than $1.5 billion in follow-on capital. “We aren’t thematic investors but are focused on technical founding teams solving hard problems into which they have unique insights, which tends to lead us to enterprise software, from developer tools up through workflow automation and systems of intelligence,” DeVore told GeekWire last week. GeekWire previously reported on this fund , when Founders’ Co-op raised the initial dollars. The last clocked in at $20 million four years ago, which followed a $7.7 million fund in 2012 and a $2.7 million original fund. DeVore and Andy Sack started the firm in 2008, along with partner Rudy Gadre, a former Facebook and Amazon.com executive. Sack stepped away from day-to-day duties several years ago, leaving the Seattle firm in the hands of DeVore, who recruited Seattle entrepreneur , co-founder of Simply Measured, to the team as a venture partner. Ginzburg was promoted to general partner last year. Sack and Gadre are still involved as venture partners. Many in the Seattle tech economy have the lack of homegrown capital available in the Pacific Northwest over the years. DeVore is one of the biggest advocates looking to change that imbalance. “Somehow, all of a sudden, it’s ten years later,” DeVore wrote in a blog post. “We’re still doing the same thing we’ve always done, but the world has changed around us.” In his blog post, DeVore noted the growth of Seattle as a tech hub, with Amazon, Microsoft, and a flurry of remote engineering outposts helping increase the talent pool exponentially: “We’ve spent the last ten years honing our craft and building a community of founders, investors and mentors dedicated to our shared mission of making the Pacific Northwest the best place in the world to start a software company. Over the same period, our regional startup ecosystem has grown and changed in ways we never imagined, offering a more diverse and talented pool of potential founders than we’ve ever seen. As with our first fund back in 2008, it looks like we’re heading into another cycle of uncertainty in the global economy. We expect markets to slow, or even contract, over the next few years. We expect the last several years’ run of easy money for startups to end along with it. Putting that all together, we know for sure that the founders we back in this next cycle will be some of the best we’ve ever seen.” in Founders’ Co-op mostly come from the Pacific Northwest and are a mix of founders and tech executives, plus family offices and foundations. The State of Oregon, via its Oregon Growth Board, invested again in the fourth fund. DeVore also runs Techstars Seattle, which its 10th class in February. Ginzburg, meanwhile, leads the Alexa Accelerator, another Techstars program that Amazon helps operate in Seattle. Founders’ Co-op, Techstars Seattle, and the Alexa Accelerator are all run out of the University of Washington’s Startup Hall.
Amazon’s Alexa Fund joins $28M round for CTRL-labs, makers of neural interface technology

Amazon’s Alexa Fund joins $28M round for CTRL-labs, makers of neural interface technology

4:03pm, 22nd February, 2019
CTRL-labs connects the human brain to a machine via a wrist-worn device. (CTRL-labs Photo) , the New York-based startup that is reimagining how the human brain can connect with machines, has closed another big funding round, with Amazon’s Alexa Fund pitching in on the $28 million haul. The round was led by GV, according to a news release on Friday, and Amazon was joined by Lux Capital, Spark Capital, Matrix Partners, Breyer Capital, and Fuel Capital. A also raised $28 million and included the late Paul Allen’s Vulcan Capital among investors. The company was co-founded by Thomas Reardon, who helped develop Microsoft’s Internet Explorer web browser, and Patrick Kaifosh, a theoretical neuroscientist. CTRL-labs has raised $67 million to date and the latest round will help with, among other things, the building and distribution of its developer kit, , currently in preview for select partners. With a wristband that picks up signals from the brain and allows users to control a digital device without moving a finger, CTRL-labs’ long-term vision is to pave the way for mass consumer adoption of non-invasive neural interface technology. The new kind of universal controller is meant to “empower humans to harness their machines as natural extensions of thought and movement,” according to the company. “Like the developers and creators we hear from, we feel fundamentally dissatisfied with the pervading technologies of the last century,” Reardon said in a statement. “Our objective with CTRL-kit is to give the industry’s most ambitious minds the tools they need to reimagine the relationship between humans and machines.” Check out some of these videos, demonstrating CTRL-labs technology in action: And here’s Reardon introducing CTRL-kit at the startup event Slush 2018 in December: