Seattle-based Madrona Enterprise Group is doubling down on a current push to speculate past the Pacific Northwest, opening its first workplace exterior the area in Silicon Valley.
Based in 1995, Madrona historically centered on its yard of Seattle and the Pacific Northwest, changing into one of many space’s largest traders of tech firms together with Apptio, Smartsheet, Impinj, and others.
However in 2019 the agency launched an “acceleration fund” designed for extra mature firms positioned throughout North America. It raised $100 million that 12 months for the fund and added one other $161 million in late 2020.
The transfer to open a bodily outpost exterior of Seattle displays Madrona’s ongoing want to look past its yard for brand new investments and preserve tabs on different tech ecosystems.
It’s an identical technique adopted by Flying Fish, one other Seattle agency that raised its second fund earlier this 12 months and stated it might broaden its geographic attain.
Madrona is “firstly a Seattle agency,” stated S. Soma Somasegar, a former Microsoft exec who grew to become managing director in 2015. The agency will proceed making a overwhelming majority of its early stage investments within the Pacific Northwest, which set data for funding ranges final 12 months.
However Somasegar additionally stated “we wish to get into the very best of the very best firms.” Planting a flag in Silicon Valley helps gasoline that objective.
“We’re going to be extra open to entering into these firms, regardless of the place they’re,” he stated.
About 15% of Madrona’s portfolio consists of firms primarily based exterior the Pacific Northwest, and half of the “acceleration fund” has gone towards out-of-town firms. A few of its current non-Seattle investments embrace fintech firm Sila; journey software program startup Spotnana; and income operations platform Clari. It has additionally backed later-stage firms akin to UiPath and Snowflake.
“We wish to be a world class agency,” stated Somasegar. “And no matter which means for us to be world class, we will probably be doing that.”
The 50-person agency is dealing with extra competitors for early-stage offers within the Seattle area, with new teams akin to Fuse, Flying Fish, Pioneer Sq. Labs and others elevating sizable funds in recent times.
“I’m actually enthusiastic about these funds,” Somasegar stated. “Typically we’re going to compete; generally we’re going to accomplice. However this actually allows us to have a much bigger ecosystem, which is simply improbable from any dimension you take a look at it.”
There are additionally out-of-town enterprise capitalists more and more trying on the Seattle space for brand new investments.
Somasegar stated the shift to distant work amid the pandemic helped Madrona get much more comfy with backing firms exterior of Seattle.
The agency additionally simply employed its first out-of-town managing director. The Palo Alto, Calif., workplace, positioned at 524 Hamilton, will open subsequent month and be led by Karan Mehandru, who simply joined Madrona because the agency’s latest managing director.
Mehandru was beforehand was a enterprise capitalist at New York-based Steadfast Capital and Menlo Park, Calif.-based Trinity Ventures, a backer of Seattle-area giants together with Auth0 and Outreach. He’ll concentrate on “early and acceleration stage firms primarily based anyplace in North America, with a concentrate on SaaS, Way forward for Work, ML/AI, clever purposes, developer centered instruments and datacenter infrastructure,” Mehandru wrote in a weblog publish.
Madrona in 2020 raised $345 million for its eighth “core” fund, which is targeted on Pacific Northwest firms. Final 12 months it added $120 million for a “Fund VII Extension Fund” from traders who beforehand backed its $300 million seventh fund raised in 2018.