Seattle venture capital firm Founders’ Co-op, an early backer of billion-dollar companies such as Remitly, Outreach, and Auth0, has raised a $50 million fund to help fuel another batch of Pacific Northwest startups.
It’s the firm’s fifth and largest fund to date since launching in 2008, and is double the size of the fourth fund raised in 2018.
Founders’ Co-op will continue betting on early-stage startups across Seattle, Portland, Vancouver B.C. and elsewhere. It raised a larger fund in part to write bigger checks, given increasing round sizes and the firm leading more rounds, said Chris DeVore, managing partner at Founders’ Co-op.
The $50 million fund is also a reflection of rising interest in the Pacific Northwest, where startups raised a record $4.4 billion last year. The fund drew more limited partners based outside of Seattle in cities such as Boston or New York.
“They want an early signal on what’s hot in this market,” DeVore said.
A flock of newer early-stage firms have sprouted up in the Seattle region lately, including Pioneer Square Labs, Fuse Venture Partners, Ascend.vc, Flying Fish Partners, and others.
All are betting on the local ecosystem, one that is now home to ten unicorns, eight of which have achieved their billion-dollar valuations in the past year-and-a-half. Other longstanding firms such as Madrona Venture Group and Voyager Capital have also reeled in funds over the past few years.
DeVore cited a steady increase in the number of entrepreneurs and new startups in the Seattle area, which has evolved from being known just as a “company town” with Amazon and Microsoft.
“We have big companies, but the range of career options for people is much more diverse now,” he said. “And so we can attract different kinds of talent, and the talent is much more mobile around the local ecosystem.”
While Seattle still remains far behind Silicon Valley, New York, Boston, and Los Angeles in total capital raised, the deal activity is garnering national attention. The Wall Street Journal this summer highlighted the Emerald City with this headline: “Venture Capitalists Target Seattle as Startup Ecosystem Grows.”
Founders’ Co-op has several B2B startups and cloud computing-related companies in its portfolio given Seattle’s strength in enterprise software. But the firm does not invest in specific verticals, instead placing more weight on the entrepreneurs. It has backed consumer companies such as Mystery, or energy startups like LevelTen Energy.
“We are not thesis driven,” DeVore said. “We’re founder driven.”
The pandemic has forced companies to accelerate the adoption of software and related services, which bodes well for tech startups offering solutions.
“The opportunity for digitization and software continues to amaze us in how large it is and how it continues to grow,” said Aviel Ginzburg, general partner at Founders’ Co-op.
DeVore previously led the Techstars Seattle accelerator but stepped down in 2019 to focus on Founders’ Co-op full time. Ginzburg, a Simply Measured co-founder who joined the firm in 2015 and became general partner in 2018, was managing director of Amazon’s Alexa Accelerator from 2017 to 2020.
Founders’ Co-op has raised $105 million over five funds. Other portfolio companies include Ally, Amperity, Karat, Bluecore, Loftium, Shelf Engine, Routable, CometML, Galileo, and more.