Founders’ Co-op turns fifteen this year. We started the firm in 2008, on the cusp of the Global Financial Crisis, and it’s somehow fitting to be entering our 15th year as the laws of financial gravity reassert themselves once again.

Our firm’s original premise was – and remains – dead simple: Seattle is a global gravity well for engineering talent, thanks to the sustained excellence and corresponding human capital needs of Amazon and Microsoft. But as a “company town” where most engineers come for a well-paying job, not as founders seeking like-minded peers, our region’s entrepreneurial support systems are surprisingly weak. Creating a “day-zero” launchpad for high-performing technical founders in the Pacific Northwest and connecting them to the global capital markets at Series A+ has been our mission since inception.

But as with most founder journeys, while our mission has remained the same, our path from concept to reality has come with plenty of hard lessons and course corrections along the way. Aviel and I are both self-taught VCs: the parts of the job we learned as founders and operators of our own companies covered just a fraction of what it means to be effective money managers, fundraisers, board members and trusted partners within the tight-knit community of professional investors.

The deepest irony of the VC business – which we understood not at all when we started but is obvious in hindsight – is that excellence in investing requires the exact opposite of what’s demanded from the best startup founders. 

Startups are defined by velocity and growth, learning and adapting faster than your competitors on the path to dominance in your chosen category. By contrast, venture capital is a craft that defies both speed and scale. Funds are deployed over years, and managed to maturity in decade-long cycles. Decisions are few and largely irrevocable: once an investment is made, it’s nearly impossible to unwind until the company fails, is acquired or becomes tradable on the public markets.

The implications of this are many. First, the increment of learning in VC is investment decisions managed to maturity. The initial deployment step can be parallelized to some extent, but the rest takes time, typically five to ten years for seed-stage investments. Because the number of decisions that make up a fund are few and the feedback cycle so long – maybe 20-25 first-check commitments managed for a decade-plus – adding more bodies to a fund doesn’t add capability, but rather dilutes institutional learning and accountability. In an ideal world, the same people who make an investment decision will also be the ones who manage it to maturity and recycle their learnings into each successive commitment. By the same token, adding more capital to a fund strategy doesn’t scale the strategy, it shifts it, often into a segment of the market very different from the one the GPs know best.

If the path to excellence in venture capital is making lots of investments and seeing how they play out, the hard part is surviving long enough to reap the rewards of that slow accretion of experience. Raising a first fund requires a leap of faith by your initial investors. Raising a second demands some promising early results. But raising funds three and beyond generally means you’ve actually delivered returns and built processes that justify a repeat commitment by LPs with access to a near-infinite shelf of alternative products, a bar most managers fail to meet.

We’re currently investing out of our fifth core fund, and since inception have backed 125 founding teams as GPs. We also created the Techstars Seattle and Alexa Accelerator Powered by Techstars programs, enabling us to roughly double our investor at-bats in the same time period, with an even more hands-on approach than a typical VC (one of the reasons we chose to exit the accelerator business a few years ago). 

As a team of two, it’s a safe bet that Aviel and I have more road miles as very early stage investors than all but a handful of VC managers worldwide. Along the way, we’ve made more than our share of rookie mistakes. We missed out on a generational public company because its $4M seed valuation was “too high”. We confused sociopathy with charisma more than once. And we’ve thrown good money after bad more often than that by letting companies fail more slowly than was healthy for everyone involved.

Our investing journey has also spanned one of the most pronounced and sustained oscillations of the business cycle since the VC business was invented. We began just as the GFC was dragging the global economy into its hardest reset in decades, and then experienced the slow buildup of a massive global asset bubble that finally popped early last year, investing steadily along the way. 

As generalist tech investors we’ve witnessed the invention of hype cycles for dozens of “innovations” both real and imagined, hardening our own judgment about what’s real and where we have an edge (B2B SaaS, Cloud, Payments) and what’s not, or at least not for us (Crypto, Drones, AR/VR, DTC, etc). With 250+ at-bats, much of this learning came from the school of hard knocks, a more searing and reliable source of conviction than TechCrunch articles and Gartner reports.

But as wrenching as the past year has been for the financial markets, and more importantly for the many founders and early hires whose lives have been upended by the sudden pivot from abundance to scarcity, it has come as something of a relief to our partnership.

When you’ve built a firm – and a worldview – on a commitment to patient craft and dependable performance, the frenzy of an asset bubble in its final throes can lead you to question your most closely-held beliefs. Why did that team get funded at all, not to mention on those terms? How did that company get acquired, and how did they justify that price? What the hell even is a SPAC, and how can it make sense for that company to be public? Is our fund too small? Do we need more money or bodies just to stay competitive? Are we stupid, or has the world really changed in ways we don’t understand?

Only time will tell if Aviel and I navigated this past few years of market dislocation with the right mix of skepticism and shrugging acceptance, but from our perspective a general return to long-term, customer-driven value creation is both welcome and long overdue.

As we embark on our next 15 years, we’ve learned to have no set ideas about what the future will bring, but we do know a few things for sure. Even in an era of remote work and Zoom-first investing, the Pacific Northwest remains as talent-rich and investment-poor as it was when we started. Aviel and I love working together to find and develop the most talented founding teams in our region. And as much as they value our help at Pre-Seed and Seed, no team in their right mind would prefer to raise their Series A from a regional generalist fund when they can access the best specialist investors in the world for their next stage of growth. By keeping our fund sizes small and laser-focused on the gaping hole in our market, we can deliver exceptional returns for our LPs, make the most of our hard-earned institutional knowledge, and have a hell of a good time doing it.

To all the founders, investors and business partners we’ve had the good luck to work with and learn from these past fifteen years, thank you for helping us discover work we love and a community we’re proud to call home. Here’s to the next fifteen years!

As software investors we love complexity. The more byzantine the problem, the more value great software can create by bringing clarity, transparency and mathematical optimization to even the messiest domains. And if you could choose one area that drives both employers and their workers completely crazy with complexity, cost and consequences, it’s health benefits.

That’s why we’re so excited to be able to announce our investment in Pebble Health alongside the news of their public launch and $17M capital raise. 

Cofounders and longtime friends Manoj Pinna and Vinay Reddy bring the perfect combination of skills and perspectives to this problem. Manoj was on the founding team at Nubank and previously led teams at Capital One and ZestFinance, He loves untangling the complexities of financial products to find value for customers. Vinay is a Google veteran whose skills in applied machine learning at massive scale bring the engineering leadership needed to winnow the jumbled mess of regulation, product and pricing information across multi-state health benefit offerings to build the right solution for each company.

Large corporations can use their economic heft, backed up by teams of analysts and negotiators, to strike the best deals for their employees. Pebble makes that same capability available to CEOs and People leaders of almost any organization, improving benefits offerings while also driving down costs. Most early growth companies are overpaying carriers and getting poor benefits. Pebble delivers better, cheaper packages for core benefits, and also makes it possible to offer sought-after benefits like fertility and expanded mental health coverage to their employees.

The Pebble team has been keeping the company and fundraise under wraps for over a year to build out their care delivery network and fine-tune the optimization logic required to deliver tailored packages in all 50 US states. A handful of our portfolio companies – like Mystery, Spice AI, Dendron and Relevvo – were given early access to the offering and quickly switched from their previous providers because the value proposition was so compelling. Today the company’s solution is available to any early growth company, and particularly those with remote-first workforces distributed across multiple state insurance regimes. To learn more visit http://pebble.health

We all need a kick in the ass once in a while. I got one Wednesday when I read the New York Times article on Patagonia founder Yvon Chouinard’s decision to put his family’s entire $3B ownership stake into a perpetual trust, with 100% of future company profits dedicated to protecting the environment.

I worked for Yvon and Malinda in the mid-’90s, first heading up the “technical” products group (all the sport-specific products requiring specialized fabrics and construction), and then leading the effort to build the company’s first online store. I was just 26 when I started there, in way over my head professionally, and still trying to figure out how to reconcile my interest in business with my desire to make the world a better place. For me, at that moment in my life, Patagonia was the perfect place to try to understand how those two often-conflicting value systems could be brought into (uneasy) balance.

Eventually my passion for the Internet pulled me away from Patagonia’s cozy home in Ventura up to the Bay Area, and then on to Seattle. But the path that Yvon showed me – brought freshly  into focus with yesterday’s news – is the same one I’m still trying to walk today.

But wait, you’re saying to yourself, you’re a venture capitalist; isn’t that among the darkest of the dark arts? How does the growth-at-any-cost world of VC have anything to do with making the world a better place?

Nearly 30 years ago these were the same kinds of questions I found myself asking Yvon and Malinda about their business. At the time, each senior leader was required to write a monthly letter to the two of them, outlining their activities but also raising issues or posing questions about the business that only the founders could address. Malinda in particular was known for reading each letter carefully, often sending it back with red-ink notes in the margin, responding on behalf of them both. Many of my letters to them found me struggling with the tension at the heart of their business: how does a company that sells affluent people more stuff they don’t need reconcile that with its stated goal of serving the environment?

Yvon’s answer to this question came in the form of a Zen parable: the “goal” of business isn’t profit, it’s to pursue your craft with a total focus on right action at each step. The process itself is the work, and if practiced with diligence over many years it will produce positive financial results, but only as “exhaust”, a side effect of having done the work correctly along the way.

The Chouinards never accepted the traditional rules of business, always finding a way to do the work that allowed them to be their authentic selves while also building a for-profit business that survived and thrived in an industry known for cyclical churn. Their decision to put the business in trust is just the latest twist in a lifetime journey of succeeding by doing things differently.

Patagonia is a global brand with $1B in annual revenue, Founder’s Co-op is a regional VC fund nobody’s ever heard of, with barely $100M under management. But when I read about Yvon and Malinda’s recent decision I felt a welcome jolt of recognition. 

Every day, Aviel and I wrestle with the same questions I struggled to answer almost 30 years ago: how do we build a business that both works and does right? How do we take care of our founders, our LPs, our families and our communities, all at the same time? Where are we getting it wrong, and how can we do better?

We already know we’re outliers in the blue-shirts-and-khakis world of venture capital. We’re self-taught VCs, having never worked at any investment firm but our own. For 14 years we’ve practiced our craft in a city that’s barely acknowledged as mattering to the global software business (despite decades of outperformance by firms large and small). In an industry that relies on Asset Under Management as the ultimate marker of both power and wealth, we’ve deliberately kept our partnership and fund sizes small. Over time, we’ve learned that certain types of founders and business models run counter to our values and we don’t choose to work with them, no matter how much money we think we might make by doing so.

None of this makes us better than any other VC firm out there. It just means we get to bring our whole selves to work every day. That’s the gift that every founder earns the right to by sticking their neck out to build something new. 

When you bring your authentic self into the world it inspires others, even if it takes a while. That’s what Yvon and Malinda taught me, and that’s our goal for the founders we back: to have the courage and strength to be 100% yourself, in life and in work, whatever that means to you. Founders are the most powerful force for good the world has ever known. If we pick the right people, and support them in the right way, everything else will come.

We’re excited to announce our investment in Goodbill, a new consumer advocate that spots and fixes overcharges in hospital bills. We’re even more excited to be sharing this investment with our friends at Maveron, a Seattle-based venture firm with an amazing track record in consumer-first investing. And we’re over the moon to be working with Goodbill co-founders Patrick Haig and Ian Sefferman for the second time.

We named our firm Founders’ Co-op because we believe that extraordinary founders – not clever ideas or VC cash – are the bedrock of startup value creation over time. The highest compliment we can ever receive is when a team of founders we’ve had success with in the past – and who because of their success could raise from any investor they choose – decide to partner with us again on their next company.*

I met Ian Sefferman back in 2008 when he was a developer at Amazon and we had just started Founders’ Co-op. He’d built a side project that he thought might be a company and wanted feedback on his idea. I backed him as one of our first fund investments and together we learned what it means for founders and investors to build a company together. 

Along the way I was introduced to a second-year UW Law student who was growing disillusioned with the idea of practicing law and was interested in startups. I introduced him to Ian, and before long Patrick Haig had dropped out of law school to join Ian as a co-founder. Their company was ultimately acquired by TUNE, which was in turn acquired by Toronto-listed Constellation Software, a happy outcome all around.

Ian and Patrick’s next project was a startup studio – Undefined – focused on health and wellness opportunities. As much as I loved working with them both, our founder-centric worldview makes us wary of the studio model, so we stayed in touch but didn’t invest (a choice that can sometimes sour a relationship for obvious reasons). But when Patrick reached out just before the holidays to say that he and Ian had fallen in love with one of their studio research projects and decided to go all in again as co-founders, we said yes without a second thought.

Healthcare payments in America are a Byzantine mess, and customers are regularly hit with surprise bills for thousands (or tens of thousands) of dollars. Medical bills are reported to be the number one cause of U.S. personal bankruptcy; they’re also rife with mistakes and overcharges that are difficult for consumers to spot and even harder to challenge. 

Goodbill uses the power of software and machine learning to spot inaccuracies in medical bills and negotiate on the customer’s behalf to have those charges reduced or removed, saving hundreds to thousands of dollars per error. It’s still early days for Goodbill’s offering but their solution is already sparking excitement from customers and consumer medical advocates alike.

We’re thrilled to be working with old friends to solve this important problem. You can add your name to their waitlist here or take advantage of their first product here to help you get reimbursed for at-home COVID test purchases.

* We were curious so we looked it up: over 25% of our investments over the past few years have been with founders we’d backed previously – higher than we thought, and a number that makes us feel good about our repeat rate while also leaving plenty of room for new people and ideas.

Today Seattle fintech unicorn Remitly (NASDAQ:RELY) begins its journey as a public company. This is obviously a huge milestone for the founders, not to mention the 1,600+ employees who have joined them along the way. It’s a different kind of milestone for me as an investor: 10 years ago I led the company’s Seed round and joined the board, where I served until the Series C. Today marks the first time in my investing life that an investment I led at Seed has made it all the way to its Wall Street debut.

I know this is a familiar experience for many of my peers in Venture Capital. And 10 years is a long time to wait in any career before achieving an important milestone. But for me, and for the investment partnership I co-founded, it still feels like a moment worth celebrating.

Today I’m feeling both lucky and grateful to have met the founders of Remitly when I did. Matt, Josh and Shivaas helped me learn early in my VC career what good really looked like. Not for their feats of “blitzscaling” or similar startup hype-factory nonsense, but for exactly the opposite: for methodically building a product and a culture that delivers real value to real people, with genuine care for the humans involved, fused with a relentless desire to get better every day, no matter how many days it takes.

Every founding team is unique, but my journey with Remitly, beginning as early as it did, helped me to see the raw excellence hidden in those that came later, from Outreach and Auth0, to Bluecore and Amperity, Ally and Level Ten Energy, Shelf Engine, Routable, Comet ML and a dozen others whose names you haven’t heard yet (but I expect you will). Along the way, I had the incredible good fortune to team up with a founder from our first fund — Aviel Ginzburg — as my investing partner. Our shared decade-plus as investors in over 250 companies — both as VC partners and in our roles leading Seattle’s Techstars programs — has built a foundation of trust, experience and craft that makes even our bad days good, and our best days better than “work” has any right to be.

The world of software investing has changed dramatically since we started Founders’ Co-op back in 2008. Things that seem obvious now — the collapsing cost of starting a software company, the corresponding ascendance of Seed (and now Pre-Seed) as the first institutional funding stage, the steady erosion of Bay Area dominance in company formation and the related rise of new centers of excellence in Seattle, Austin, New York, LA and beyond — all of these were unknowns when I began my journey as a venture investor.

I fell in love with the Internet back in 1993 and spent my first 15 years as a founder/operator, creating and launching Patagonia’s first online store, bootstrapping an ecommerce software startup to $15M in revenue before selling it to a public acquirer, co-founding — and failing at — a venture-backed startup, before switching roles to help other founders as an investor at the earliest stage.

The ‘aha’ moment for me came after moving back to my hometown of Seattle after many years in California. Founding a company here, even with the support of local and Bay Area VCs, was ten times harder than bootstrapping my first company in San Francisco had been. From raising money, to attracting great talent, to finding a local peer group of high-performing founders, building a startup in Seattle was frustratingly, unnecessarily hard. In a market so rich in engineering talent and an incredible — if concentrated — history of tech wealth creation, that seemed like a problem worth solving.

Like any startup journey, the years have been short but the days long. As a self-taught VC I learned my most important lessons the hard way. And the most enduring lesson of all is how long it takes to build anything of real value, whether it’s a company, a venture firm, or a startup ecosystem.

The venture industry values speed above all else, but today I know that every story of overnight success you read in the trades has been carefully pruned and compressed to create the illusion that the journey was both short and wildly successful from the beginning. Not only is that a misleading and disheartening lie to first-time founders, it dishonors the grit, craft and resilience of those few founding teams who do make it all the way to the public markets.

Ten years later, Seattle is still mostly a company town, where big employers like Amazon and Microsoft dominate the talent market and founders have to be twice as capable, persistent and resilient to raise their first institutional round. I still feel like an outsider in the very insider-y business of Venture Capital. And I still have so much to learn. But today I’m feeling grateful for my amazing investing partner, the extraordinary founders we’ve backed along the way, and all we’ve learned and done together that has brought us to this point. Go Remitly, and thank you Matt, Josh and Shivaas.

Aviel and I are thrilled to share the news that we’ve just closed a new fund, our fifth, and at $50M our largest yet.

In most ways, this is just business as usual. Our LPs, many of whom are founders themselves, love our commitment to being first and fast, writing high-conviction pre-seed and seed checks to the best technical founding teams in the Pacific Northwest. We have an enviable track record of helping those founders raise from the best later-stage investors in the world. And with over 200 companies in our combined portfolios, we’ve assembled the most powerful founder support network in the region.

What’s different this time is mostly how the world has changed around us.

When we started Founders’ Co-op back in 2008, Seattle was still a company town. Amazon and Microsoft dominated the market for talented software developers. The Bay Area still reigned supreme as the center of the startup universe. And billion-dollar startups were so rare they didn’t even have a name.

Five funds and over $100M later, the world looks different.

Seattle has become one of the most important cities in the world for cutting-edge engineering in cloud, machine learning, and enterprise software. Every global tech leader has a footprint here, many employing thousands of developers locally, creating a vibrant and highly liquid talent market.

At the same time, the Bay Area’s dominance of startup culture has eroded, partly due to a recurring failure of civic leadership, accelerated by COVID and the shift to remote work. Meanwhile, our company town has become a place where ambitious founders increasingly choose to build their startups and raise their families, even if the growth capital they need still comes from somewhere else.

We were lucky enough to team up with many of these founders at the beginning of their journeys, writing the first institutional checks into a growing herd of Seattle unicorns like Remitly, Outreach and Auth0. We created the Techstars Seattle and Alexa Accelerator programs to bring the community together around the region’s most promising founding teams from the very beginning. And we partnered with the University of Washington to house all these activities on the UW campus, injecting a new current of entrepreneurial energy into the region’s flagship research university.

So while a new fund doesn’t change much about who we are and what we do, our market is on the verge of an explosive wave of entrepreneurial growth, and we couldn’t be more excited to partner with the next generation of amazing founders at the beginning of the best startup decade this region has ever seen.

We want to express our deep gratitude to the fund investors who make it possible for us to do our work (many of whom have been with us since the beginning), and to the extraordinary founders who have welcomed us into their lives as investors and business partners. We love what we do and feel lucky we get to take another swing.

Here we go.

Last week I spotted this annotated twitter thread from Fred Destin, which he kicked off with a simple question:

As founders-turned-VCs, Aviel and I have always relied on the “golden rule” principle — treating founders the way we wish we had been treated when we were in their shoes — when deciding how to build our own firm here at Founders’ Co-op. 

As operators, we were lucky to raise from some pretty amazing VC role models, people like Brad Feld at Foundry Group, Ethan Kurzweil at Bessemer Venture Partners, and Karan Mehandru at Trinity Ventures. But along the way we experienced many of the behaviors Fred’s post talks about, so we know how awful the experience of raising VC can be.

Our first reaction to reading Fred’s post was that, by relying on our own experiences and learning over our 10-plus years and 200-plus early-stage investments, we’ve developed a strong shared view of what our customer experience should feel like. But one thing that really jumped out at us was how bad a job we’ve done at telling founders exactly what they can expect from us.

A wish becomes a promise when you put it in writing. This post is our first attempt to lay out our customer experience promise to the founders we work with, so that anyone we engage with knows what to expect, and so we can be held accountable for failing to live up to our ideals.

In the process of writing this post we realized we had a lot to say on the topic. Since most founders are too busy to read long blog posts, here’s the tl;dr:

– Tell the Truth
– Be Fast
– Give First
– It’s Your Company
– Be Human

For those with more time, here’s what we mean by all that…

Tell the Truth

Success in venture investing is random and unpredictable. Ideas that start out bad often get better over time as founders learn and adapt. Weak teams can get stronger as co-founders come and go. The instinct in venture is to never close a door on a founder or investment opportunity, because maintaining optionality over time is how you get into that one great deal when the time is ripe.

From the founder’s perspective, this makes it seem like every VC is a pathological grin-fucker. Everyone wants to be your friend and nobody will tell you your baby is ugly, and yet somehow they also don’t want to write you a check today, for reasons they can never quite explain in a way that feels true. So you wander from fancy office to fancy office, never knowing where you stand and just wishing someone would be honest with you for once about what they like and don’t like about your team, your company and your opportunity.

Our promise to founders is to always tell the truth. If we like something, we’ll tell you we like it and try to explain the reasons why. If we don’t like something, we’ll do the same. And if we aren’t sure what we think, because we don’t know enough yet and need more time to see if we can get our heads around it, we’ll tell you that too. But we won’t use that last one as a ploy to string you along and buy time to see if something changes that makes us like it more. Which brings us to:

Be Fast

No professional is more time-crunched than a seed-stage founder. Every single function that is staffed by a senior leader and their supporting team in later stages — from product, engineering, sales, marketing, finance, operations, and customer success, to taking out the trash and resetting the WiFi router — is 100% on the shoulders of you and your co-founders. Wasting a founder’s time is stealing their most precious resource, and reflects at best a lack of empathy, at worst a lack of respect.

Between our own fund investing and our years as Techstars Managing Directors, Aviel and I have participated in and coached founders through over 200 seed-stage financings. We’ve seen every possible flavor of time-wasting VC behavior, from never-ending requests for additional “diligence” information (this for companies with typically less than a year of operating history and often no product or customers), to weeks or months of inconclusive meeting requests involving a shifting cast of characters and no clear decision-maker, to outright ghosting without even the courtesy of a polite ‘no’.

Our promise to founders is to never waste your time. Aviel and I are the only people you need to talk to to get an investment decision. If it’s a no, we’ll tell you within 24 hours or we’ll explain why we need more time. If it’s a yes, we’ll tell you we’re headed that way and what we need to learn in the following week or two to make it official. There should never be enough distance between our final answer and our last interaction to leave a founder surprised. And while we have to gather certain information to protect our investors and make sure we understand how you think about your business, we won’t make you do our homework for us, or demand artifacts that no early-stage business should have wasted a minute creating.

Give First

VCs like to talk about their “value add”, all the ways in which their help is worth so much more than their money. Some of the biggest firms (Andreesen Horowitz was among the first and has taken it the furthest) have built full-fledged, free-of-charge consulting shops on behalf of their portfolio companies, with huge operational support teams that help with everything from recruiting and business development to culture and training. No matter the scale, the implicit promise is this: “if you take my money, I’ll help you build your business”.

Like Fred, I thought one of the best responses to his post came from Natty Zola, MD of Techstars Boulder and GP of Matchstick Ventures: 

Natty’s answer is an elaborated version of Techstars’ prime directive: Give First. Instead of using the power imbalance between investors and founders as leverage, “add value” and earn trust by giving it away.

Founders’ Co-op partnered with David Cohen and Brad Feld to create the Techstars Seattle program back in 2010, one of the first expansion programs in what’s now a global network of entrepreneurial support offerings. Before joining the fund full-time, Aviel helped build and lead the Alexa Accelerator, another Techstars program created in partnership with Amazon’s Alexa Fund to support the global voice and conversational AI ecosystems. We’ve both seen up close how powerfully the “give first” mindset unlocks value for founders and investors alike.

If you’re a founder building a venture-scale company in the Pacific Northwest, in a domain that we know well enough to actually be useful to you, we promise to offer our help before we ask you to take our money. Whether it’s customer intros, recruiting leads, or even connections to other investors, we’ll do our best to show you how we work with founders before we invest, so you can make an informed decision about whether we really are worth more than our money.

It’s Your Company

One of the biggest worries founders have about raising outside capital is the risk of losing control of their own company. And while VC investments don’t usually give investors much say over the day-to-day operations of the business, that doesn’t stop some of them from acting like they run the place.

Running a fast-growing startup is one of the most confusing and stressful jobs in business. There’s always too much to do and not enough people to do it, the runway clock ticks louder every day, and the survival of the business is always in doubt. It can be hard for founders caught up in the daily shitshow to think about anything else. But for exactly that reason, nobody knows more about what’s working and not working than the founders, and nobody will ever care more than they do about the company, its employees and its customers.

Where founders go deep, investors go wide. We’ve seen some version of the same movie play out dozens — or in our case — hundreds of times. The characters and situations may change, but the fundamentals are often eerily similar. But when it comes to making a specific decision about a specific problem in your business, we always trust the founder’s depth and commitment more than our broad-but-shallow pattern-matching ability.

If you take our money, we’ll do everything in our power to help you succeed. We’ll open our networks, share our experiences and act as thought partners whenever you’re facing a tough situation. It’s our obligation to ask questions and share our perspective to help you get to your best decision. The one thing we won’t do is tell you how to run your business — no matter how hard the conversation gets or how strongly we disagree, our final words will always be: “it’s your company”, and we’ll mean it.

Be Human

We named our firm Founders’ Co-op for a reason. Our theory of change — the one principle that our entire worldview as investors is built around — is that founders: extraordinary, unreasonable, obsessive, complicated human beings, are the engine of all positive change in the world. Truly great organizations aren’t built from clever market analyses and slick packaging, they’re built by small teams of superheroes who “can’t not do” the one thing they’ve set out to do.

This worldview comes with a whole set of corollaries and implications, some obvious, some less so. At the more obvious end, it means that when we invest in you, we’re investing in *you*, not your idea, your traction, your deck or any of the other artifacts that founders are often asked for when performing the strange mating dance of the venture capitalist. It also requires us to look in the mirror at our own quirks and peculiarities, to show up as ourselves in every interaction we have with founders, so that when we choose each other we do so as humans, not as checkbooks or cap tables.

At the less obvious end, a human-centered approach to venture investing means that relationships are forever, potentially spanning decades and multiple companies, through good times and bad. As long as we always do our best, treat each other with respect, don’t betray trust or take advantage of one another when the seesaw of leverage tips temporarily in our favor, our relationship will become an enduring source of joy and strength for both of us.

Signing up for a deep and long-lasting personal relationship may sound like more than you want from your investors, when everyone’s money is the same shade of green and the idea of “VC value add” smells like the typical bullshit that people with leverage use to get over on those still coming up. If so, we’re probably not your guys, and that’s OK.

Feedback

The way we see ourselves is rarely a perfect match to how others see us. And our behaviors don’t always line up with our ideals. But if we tell you what we stand for and invite you to hold us accountable, it lets as little daylight as possible exist between our intention and your reality. We’re proud of our firm and the work we do, but we’re human too, and if we are thinking of choosing each other, we should both be able to make that choice with clear eyes and open hearts.

The U.S. spends about twice what other high-income nations do on health care, but with results that are often worse than those countries achieve at much lower cost.

In 2009, in a national effort to improve quality and lower costs, the Federal government launched a huge incentive program to drive the adoption of Electronic Medical Records (EMRs), spending an estimated $40 billion over the past decade to implement this data-gathering technology in hospitals across the country.

This massive national investment in data infrastructure laid the tracks for system-wide breakthroughs in data-driven healthcare, but the benefits of that investment have been tantalizingly slow to appear; growth in US healthcare costs continues to outpace inflation, and the category now accounts for more than 18% of GDP

Today we’re proud to announce our investment in MDmetrix, a company that harvests the massive, minute-by-minute data flows generated by EMR systems and applies recent advances in machine learning and data science to help bend the cost curve and improve patient outcomes at the same time.

Those are bold claims, but they’re backed up by hard evidence generated by the company’s pioneering efforts at local healthcare leader Seattle Children’s Hospital (SCH). With support from Seattle Children’s Research Foundation, MDmetrix was originally developed to address physicians’ frustration with the lack of visibility into health outcomes. Once the system was deployed, it quickly became clear that both medical leaders and frontline physicians could use MDmetrix to assess and improve all aspects of clinical operations. The results were dramatic: MDmetrix has enabled its customers to improve care for thousands of patients, while also surfacing millions of dollars of cost savings and revenue enhancement opportunities.

MDmetrix is a commercial spinout from the non-profit Seattle Children’s, and the founding team includes the key technologists and medical leaders that helped develop and prove out the solution for SCH. They’re joined by a seasoned healthcare software leader, CEO Warren Ratliff, who previously played key roles at healthcare giants like McKesson and GE Healthcare, and at successful high-growth healthcare startups like Caradigm (a joint GE and Microsoft spinout).

We’re pleased to be joined in this fundraise by the Washington Research Foundation and Arnold Ventures, co-investors with a long track record of supporting health care innovation and commercialization efforts here in the Pacific Northwest. There’s a long road ahead to prove that the results achieved at Seattle Children’s can be replicated at scale across the industry, but the prize — better care at lower cost for millions of Americans — is well worth the effort.

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.

We’ve written a lot about how our investing work at Founders’ Co-op connects to the broader global market for innovation finance (see The Venture Capital Stack or Regional Seed Investing), but we’ve never said much about where our own fund’s capital comes from.

Recent events have shined a bright, and ugly, light on the source of much of the money driving the current Venture Capital boom, and fellow investors and industry journalists are now advocating for greater transparency about whose money you’re actually taking when you accept a VC check (see this post from USV’s Fred Wilson, or this Techcrunch piece from Jon Evans).

As our earlier posts have described, global allocators of capital like Saudi Arabia aren’t much interested in regional or seed-stage investing; they have to deploy money in such huge volumes and with such frequency that only the biggest and most global platforms (like Softbank) are a fit. So if you’re curious, we never asked, and they certainly didn’t come calling.

But we do care, a lot, about where our money comes from. And while it’s not something we talk about publicly, at Founders’ Co-op we’re as proud of our investor base as we are of our investment portfolio.

Our work is intensely local, and intensely personal. We invest in exceptional people who have chosen to build their companies here in the Pacific Northwest. When they succeed, companies like Remitly, Outreach and The Riveter provide exciting, well-paying jobs for hundreds or even thousands of people who live and work here in the region. The leaders of those companies also become civic leaders who give back to our community, and they model the kind of pioneering courage that put our region on the map in the first place.

Our investors trust us to produce a compelling financial return, but they choose us over the thousands of competing alternatives because they believe what we believe: that building great companies in the place where you live produces returns that go way beyond a check in the mail. Well-paying jobs. Engaged citizens. A leadership role in the global economy. Thriving cities that are magnetic to talent from around the globe.

Given the values we practice as a firm, it should come as no surprise that our money is almost entirely local: founders and early leaders from our region’s most successful companies (including many of our own portfolio companies); families and family foundations with a long history in the region, who want to leave it a better place for their children and grandchildren; and even state governments with a voter-endorsed commitment to reinvesting in the next generation of local jobs and growth.

We know our investors and they know us. Our work is personal, and we take it personally.