Hey, I'm Dan! I invest in startups at Madrona and write the DL, a weekly newsletter about tech in the Pacific Northwest

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Five Years of PNW Venture Capital

I’ve been at Madrona for five years now, which means I’ve finally reached a kindergarten-level understanding of startups and investing! 🥳 In celebration, here’s a look back at how the PNW startup market has changed over those five years.


1. Many more deals, and even more capital

Since 2015, there’s been a 2x increase in the number of VC-backed seed deals per year, and the median seed deal has gone from a $1M investment at a $5M post-money valuation to a $2M investment at a $10M valuation.


Because of the combination of more deals and higher valuations, there’s also been a 3x increase in total capital invested in seed deals per year. There are many more people starting companies than five years ago, and there is a lot of investor demand for PNW startups.


2. SaaS is the largest category, but life sciences and healthcare are growing quickly

Number of PNW Series A deals by vertical

Number of PNW Series A deals by vertical

One thing that hasn’t really changed over the last five years is the biggest proportion of Series A deals over the last five years have been in SaaS. There are, however, more companies working on AI/ML and Big Data products, and both of those categories are growing steadily.


HealthTech, Life Sciences, Wellness, and Oncology, on the other hand, were a much smaller proportion of deals in 2015, but they’ve all grown significantly, as I’m sure you’ve seen in The DL’s monthly deal roundups.


Other categories to watch are cannabis (one big jump so far) and real estate (where Seattle probably has the most experienced entrepreneurs and advisors in the world).


3. Investors are coming from all over to invest in Seattle

Number of PNW investments for VCs with $100M+ AUM

Number of PNW investments for VCs with $100M+ AUM

There are ~80 VC firms who have made at least 5 investments in PNW-based startups over the last 5 years, and there are 20 VC firms who have made more than 10 investments in PNW-based startups over the last 5 years.


As more investors continue to make or start making investments in Seattle startups, founders have more options for fundraising, and deals are getting more and more competitive.


4. Unicorns, not so mythical anymore

When I started at Madrona in 2015, there were only ~20 companies in the PNW that had reached a $1B+ valuation, with 1-2 new unicorns being minted each year. Since 2015 there have been 18 new unicorns, including 4 in the last two months!


PNW companies don’t spend a lot of time tooting their own horns about these types of milestones, but this is a great data point showing that not only are we seeing more and more startups getting funded each year, they are also continuing to grow and become billion dollar companies.


5. Don’t forget about Big Tech!

Amazon is worth ~$1.6T as of the writing of this newsletter, and their stock has 6x-ed since 2015. When their stock goes up or down 2.3%, that is $36B, or one Stripe (the most valuable startup in the US). 🤯


Living in the PNW tech ecosystem, it’s easy to forget that Amazon and Microsoft are the two most important productivity, ecommerce, and cloud companies in the world, AND they have also successfully built multiple $1B+ businesses in the last 5-10 years.


Take Teams, for example. Microsoft announced Teams in 2017. Two years later, Teams overtook Slack ($16B market cap) in daily active users and is now riding the work from home wave to even more growth and engagement.



TL;DR: It’s been an amazing time to work in the PNW startup ecosystem. Early stage startups, late stage startups, and the big tech companies are all making it rain!


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