Inrix CEO Bryan Mistele knows just how hard it is to raise venture capital. Before the company grew to more than 275 employees, the entrepreneur said that he pitched the concept to 70 venture capitalists.
All of them said no.
Mistele recalled that story today during one of the most informative panels at the WTIA’s TechNW event, using it as an example of entrepreneurial persistence.
But it also highlighted one of the big problems facing Seattle.
At least in Mistele’s view, the venture capital community just isn’t strong enough.
While the former general manager of Microsoft’s automotive group said that Seattle deserves an “absolute A” — driven largely by the talent base in the region — he added that the weak link is money.
If there were one thing he’d change, it would “absolutely be the venture capital community,” said Mistele, whose company just raised $37 million from Silicon Valley powerhouses such as Kleiner Perkins, Venrock and others.
According to recent statistics, he said that just two percent of venture capital financing deals happen in Seattle.
“That tells me, if you really want money, you have to spend 98 percent of your time outside of this city to raise money. That’s where the deal flow is,”
Apptio CEO Sunny Gupta — who has successfully raised venture capital in Seattle at two companies with capital from Seattle and the Bay Area — has been pleased with the support of venture firms like Madrona. But he too worries about the Seattle label, thinking it
“I always feel like we want to be a Seattle company, but in the Valley, we want to be known, and we don’t want to be forgotten. We don’t want to be known as just a Seattle company,” Gupta said. ”
After the panel, Mistele elaborated on his own fundraising experience, noting that he almost gave up following the VC rejections. Entertaining a job offer from a publicly-traded tech company, Mistele consulted with his wife. The next morning she told him to stick with the startup, and as a result the online traffic analysis startup kept chugging along.
All of that said, the big reason that Mistele gives the Seattle region an “A” is because of the talent base.
Of the 275 employees, Mistele said that he’s lost just five employees to attrition that they didn’t want to lose. In the Valley, he noted that friends at some companies are dealing with attrition rates of more than 20 percent.
“This is a much better opportunity to build a long-term viable company,” he said.