Seattle-based Madrona Venture Group is stepping up its efforts to invest beyond the Pacific Northwest, opening its first office outside the Silicon Valley region.
Founded in 1995, Madrona has traditionally focused on its Seattle and Pacific Northwest backyard, becoming one of the region’s largest investors in tech companies including Apptio, Smartsheet, Impinj and others. .
But in 2019, the company launched an “accelerator fund” designed for more mature companies located across North America. He raised $100 million that year for the fund and added another $161 million at the end of 2020.
The decision to open a physical outpost outside of Seattle reflects Madrona’s continued desire to look beyond its backyard for new investments and to keep tabs on other tech ecosystems.
It’s a similar strategy followed by Flying Fish, another Seattle company that raised its second fund earlier this year and said it would expand its geographic reach.
Madrona is “first and foremost a Seattle company,” said S. Soma Somasegar, a former Microsoft executive who became chief executive in 2015. The company will continue to make the vast majority of its start-up investments in the north. -western Pacific, which set records for funding levels last year.
But Somasegar also said “we want to get into the best of the best companies”. Planting a flag in Silicon Valley helps fuel that goal.
“We’re going to be more open to getting into these businesses no matter where they are,” he said.
About 15% of Madrona’s portfolio consists of companies based outside of the Pacific Northwest, and half of the “acceleration fund” has gone to out-of-town companies. Some of his recent investments out of Seattle include fintech company Sila; travel software startup Spotnana; and the Clari revenue operations platform. It has also backed more advanced companies such as UiPath and Snowflake.
“We want to be a world-class company,” Somasegar said. “And whatever it means for us to be world class, we will.”
The 50-person company faces increased competition for startup deals in the Seattle area, with new groups such as Fuse, Flying Fish, Pioneer Square Labs and others raising significant funds in recent years. .
“I’m really excited about these funds,” Somasegar said. “Sometimes we will compete; sometimes we will associate. But it really allows us to have a bigger ecosystem, which is just fantastic from any dimension.
There are also out-of-town venture capitalists increasingly looking to the Seattle area for new investments.
Somasegar said the shift to remote work amid the pandemic has helped Madrona feel even more comfortable with supporting businesses outside of Seattle.
The company also just hired its first out-of-town general manager. The Palo Alto, Calif. office at 524 Hamilton will open next month and will be led by Karan Mehandru, who has just joined Madrona as the company’s new general manager.
Mehandru was previously a venture capitalist at New York-based Steadfast Capital and Trinity Ventures, based in Menlo Park, Calif., a backer of Seattle-area giants including Auth0 and Outreach. It will focus on “start-up and acceleration-stage companies based anywhere in North America, with a focus on SaaS, the future of work, ML/AI, smart apps, developer-focused tools and data center infrastructure,” Mehandru wrote in a blog post.
Madrona in 2020 raised $345 million for its eighth “main” fund, which focuses on Pacific Northwest companies. Last year, it added $120 million for a “Fund VII expansion fund” of investors who had previously backed its seventh $300 million fund raised in 2018.