Madrona corporate group has raised more than $ 500 million in new capital that the 25-year-old Seattle-based venture capital firm will use to fund early and late-stage startups. This is the company’s largest fundraising campaign.
Madrona has raised $ 345 million for his eighth fund – money he will use to invest in 35 to 40 tech startups in the Pacific Northwest over the next few years. It also raised $ 161 million for its second “Accelerator Fund,” designed for more mature businesses located across North America.
The new capital follows Madrona’s seventh $ 300 million fund raised in 2018 and $ 100 million raised last year for the inaugural accelerator fund.
The new funds reflect Madrona’s continued bet on the growing technology ecosystem of the Pacific Northwest, as well as the fruits of returns on investments in companies such as Accolade, Redfin, Snowflake, Heptio, Xnor.ai, Lattice Data and a multitude of others.
“This highlights how well Seattle is recognized as a place of business creation and creation, but also a ‘Seattle state of mind’ in terms of helping business start-ups at any time,” said Matt McIlwain, general manager of Madrona.
Earlier reports on the new funds – based on SEC files released this week – did not detail Madrona’s comprehensive fundraising efforts. GeekWire sat down with McIlwain on Wednesday to get more details.
Even though Madrona is increasingly betting on early stage companies beyond the Pacific Northwest, McIlwain said she is still very committed to supporting small businesses in her backyard.
“We are tripling on this fundamental thesis in which we have believed for 25 years,” he said.
More than 90% of the investments made from Madrona’s seventh fund have been in Seed and Series A transactions. McIlwain said the company has invested less than half of the seventh fund to date, in part because ” it reserves capital to support portfolio companies as they grow.
Madrona will seek to make investments ranging from $ 500,000 to $ 8 million for the eighth base fund, and $ 8 to $ 12 million for the second accelerator fund.
McIlwain described the acceleration fund as “additive”. He said he draws on both Madrona’s own experience partnering with large companies such as Smartsheet and Impinj since their inception, as well as the collective experience and knowledge of the community of its partners in the Seattle ecosystem.
This includes tech giants like Microsoft and Amazon – Madrona co-founder Tom Alberg was an early investor in the retail and cloud computing giant – as well as his partnerships with the school. of Computer Science from the University of Washington and the Allen Institute of Artificial Intelligence (AI2).
Madrona has proven its ability to support nascent startups that grow into large companies. His track record of investing in early stage companies, especially those outside his backyard, is not yet so clear. Recent investments from the acceleration fund include companies such as VNDLY; Claire ; and Coda.
Madrona will continue to follow its main investment themes which include the intersection of machine learning and life sciences; next-generation software infrastructure; low-code or no-code platforms; the digital transformation of consumer experiences; “Intelligent applications; “And” the future of work “.
The $ 345 million fund is one of the largest fundraisers for any venture capitalist in the Pacific Northwest and provides more start-up funding to a region frequently criticized for its lack of investment options .
Madrona is almost synonymous with Seattle’s venture capital scene – a powerhouse so strong that some entrepreneurs are worried about the influence she has as the custodian of funding.
“We are super curious and we will really meet anyone. We like to take the first meetings, ”said McIlwain. “We consider it our duty to add value to any business and any entrepreneurial team that wishes to take the time to meet with us. “
In recent years, Madrona has faced increased competition on offerings from new companies such as Flying Fish Partners and Pioneer Square Labs, co-founded by former Madrona CEO Greg Gottesman. Out-of-town investors are also investing more frequently in Seattle-area startups.
“It’s good for the region to not only have diverse sources of capital, but also people who are really willing to roll up their sleeves and add value with you from day one,” said McIlwain. “The more it focuses on companies based in Seattle and the Pacific Northwest, the better.”
Seattle startups have been fundraising lately. Venture capitalists poured $ 1.1 billion out of 65 deals in the third quarter, according to GeekWire’s tally, derived from our ongoing list of investments in Pacific Northwest startups. July and August funding totals eclipsed last year’s levels.
While Seattle lags far behind Silicon Valley, New York, Boston and Los Angeles in terms of total capital raised, transaction activity is attracting national attention. The Wall Street Journal this summer shone a spotlight on the Emerald City with the headline: “Venture Capitalists Target Seattle as the Startup Ecosystem Grows. “
The Seattle area is now home to 10 unicorns, also known as startups valued at $ 1 billion or more. Eight of the 10 companies have reached their high valuations in the past 18 months, and five years ago there were no unicorns in the area.
Madrona is an investor in only one of these unicorns: cloud storage company Qumulo.
In recent years, Madrona has strengthened its line of CEOs, adding seasoned technology leaders such as S. “Soma” Somasegar, a longtime Microsoft executive; Hope Cochran, former CFO of King Digital; and Steve Singh, former CEO of Concur and Docker.
Madrona also continues to help support Madrona Venture Labs, a start-up studio he launched in 2014. MVL raised his own third fund last year and created several companies this year.
Investors in the new funds are mainly those who have participated in previous funds – endowments, universities, foundations, large family offices and high net worth individuals.
Venture capital fundraising in the United States hit an all-time high this year, reaching $ 69.1 billion as of November 20, according to PitchBook. But while overall funding is on the rise, the number of companies that have raised funds has declined by around 50%.