Madrona Enterprise Group has raised its largest fund ever, reeling in $690 million throughout two investing autos that can assist the Seattle agency again extra startups in its yard and past.
Regardless of a shaky macroeconomic setting, the newest fundraise “got here collectively in a short time,” stated Matt McIlwain, managing director of the 27-year-old agency. It’s one of many largest funds ever for a Pacific Northwest enterprise capital agency.
Whereas the greenback quantity is almost a 40% bounce in comparison with Madrona’s final fundraise in late 2020, McIlwain stated the agency nonetheless plans on backing the same quantity of firms from its ninth fund — round 40 enterprise investments whole.
“You want extra {dollars} per firm, to assist them on this section of the broader enterprise capital ecosystem,” McIlwain stated. The U.S. enterprise capital market set data final 12 months, with $330 billion invested throughout greater than 17,000 offers.
At the same time as some enterprise capitalists sluggish their investing amid broader market uncertainty, 2022 is about to be the most important fundraising 12 months for VC corporations, PitchBook reported in July.
Madrona raised $430 million for its core “Madrona Fund 9” that can assist early-stage firms throughout the Pacific Northwest, and one other $260 million for its “Acceleration Fund 3” which is used for later-stage firms nationwide.
The agency has more and more seemed elsewhere for brand new investments by way of the Acceleration Fund, which initially launched in 2019 and has backed later-stage firms resembling UiPath and Snowflake, in addition to a variety of smaller startups.
About 15% of Madrona’s portfolio now consists of firms based mostly outdoors the Pacific Northwest. Final month it introduced a brand new Silicon Valley workplace and employed a brand new managing director based mostly in Palo Alto, Calif.
Nonetheless, McIlwain burdened that Madrona is “100% a Seattle-first enterprise agency.”
“I believe the rationale we had such a terrific fundraise shouldn’t be as a result of we have been attempting to be the perfect agency in Seattle,” he stated. “We’re attempting to be a terrific world class agency that has a method and a deal with Seattle and the broader Pacific Northwest.”
The agency expects to take a position half of the Acceleration Fund into Pacific Northwest firms — together with these it might have missed out on earlier, resembling digital actuality firm Rec Room.
“We made the fallacious determination there to not make investments early on,” McIlwain stated. Madrona then led the Seattle firm’s $20 million Sequence C spherical, and invested once more final 12 months as Rec Room’s valuation hit $3.5 billion.
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; “clever purposes;” and “the way forward for work.”
The agency has been extra cautious with its crypto-related investments however it sees promise in blockchain applied sciences.
“We do have some blockchain-enabled firms which are performing some actually fascinating work,” McIlwain stated. “And we imagine in that form of broader development over time.”
Madrona is dealing with rising competitors for offers within the Seattle area from newer teams resembling Fuse, which spun out of Ignition Companions in 2020 and raised $170 million for its first fund, and different early-stage backers resembling Flying Fish Companions and Pioneer Sq. Labs — co-founded by former longtime Madrona managing director Greg Gottesman.
There are additionally fellow longstanding corporations resembling Trilogy, which raised greater than $150 million for a brand new fund earlier this 12 months, and Maveron, which raised $225 million in Might.
McIlwain stated Madrona welcomes the competitors, even when it means the agency might lose out on extra offers.
“What’s totally different concerning the Seattle ecosystem is that it’s extra collegial and extra collaborative and I believe that’s very constructive. And we wish to form of preserve it that means, collectively,” he stated. “However we additionally don’t need that to carry us all collectively again from constructing that greater pie, and collectively serving to to construct some actually nice lasting important firms.”