Where does the time go?
In early 2008 we announced the formation of Founders’ Co-op. We called it a fund, but at $2.7 million it wasn’t much of one, just some of our own money and some from a few local friends who knew how hard it was to be a founder up in this remote corner of the world.
Seattle then was famous for its coffee, for airplanes, and as the home of Microsoft, a once-feared tech monopoly whose valuation had peaked back in 1999, brought low by the one-two punch of the internet bust and the Justice Department’s antitrust ruling. The long-running property bubble had popped in late 2007 and global markets were unraveling, eventually turning into what would become known as the Great Recession.
In retrospect, it’s hard to imagine what we were thinking.
But starting a new fund in a downturn has its benefits. The only kinds of founders who start companies in the teeth of a recession are the ones who can’t imagine doing anything else. They don’t expect it to be easy, and when that turns out to be right they don’t quit. We met some amazing founders through that first fund, like Kabir Shahani and Chris Hahn at Appature, Aviel Ginzburg, Damon Cortesi, and Adam Schoenfeld at Simply Measured, and Scott Kveton and Steven Osborn at Urban Airship down in Portland.
As we learned from our early mistakes (and occasional good luck), we realized we needed to do even more to help local founders avoid the many traps and pitfalls that derail promising companies before they even get started. Some friends in Boulder were experimenting with an idea for a “startup accelerator” they called Techstars. We asked if they’d be willing to let us try a version of it here in Seattle and they agreed, so we launched the first Techstars Seattle class in the summer of 2010. We raised our second fund around the same time, a whopping $7.7 million, to lean into our strategy of being first to support the most promising founders here in the Pacific Northwest.
Somehow, all of a sudden, it’s ten years later. We’re still doing the same thing we’ve always done, but the world has changed around us.
Seattle is now one of the world’s top markets for software engineering talent. Microsoft is resurgent under Satya Nadella’s leadership, and local upstart Amazon has taken its place as the most feared company in tech. Bay Area leaders like Google, Facebook and Apple (plus dozens more) have scaled their Seattle offices to thousands of employees, taking advantage of our deep bench of talent, and drawing in more.
Over the past 10 years, through three successively larger funds, we’ve made over 90 first-check investments in Pacific Northwest companies, including some well-known local names like Remitly, Outreach, Auth0 and The Riveter. In aggregate, those 90+ companies have gone on to raise over $1.5 billion in follow-on capital, and now employ thousands of talented people here in the Pacific Northwest, and around the world.
One of those amazing founders from our first fund, Aviel Ginzburg, is now my investing partner at Founders’ Co-op, and we just closed our fourth fund, our largest ever at $25 million. In a few weeks we’ll celebrate Demo Day for our 10th Techstars Seattle class, bringing us to 100 total new companies that have been supported by that program.
Venture funds have a ten-year life, so every time we close a new fund it means we’re signing up for another decade of investing. Ten years ago we knew we wanted to help the best founders in the Northwest stay and build their companies here instead of leaving for the Bay Area. We just weren’t sure exactly how.
This time it’s different.
We’ve spent the last ten years honing our craft and building a community of founders, investors and mentors dedicated to our shared mission of making the Pacific Northwest the best place in the world to start a software company. Over the same period, our regional startup ecosystem has grown and changed in ways we never imagined, offering a more diverse and talented pool of potential founders than we’ve ever seen.
As with our first fund back in 2008, it looks like we’re heading into another cycle of uncertainty in the global economy. We expect markets to slow, or even contract, over the next few years. We expect the last several years’ run of easy money for startups to end along with it. Putting that all together, we know for sure that the founders we back in this next cycle will be some of the best we’ve ever seen.
We can’t wait.