Seattle’s high-tech industry has minted thousands of millionaires over the years as companies such as Microsoft, Amazon.com, Isilon Systems and aQuantive turned stock options into gold. And there may be more on the way. According to a report by Deloitte, Washington state’s ranks of millionaires will grow from 226,000 in 2010 to 534,000 in 2020.
That’s not too shabby, but still well below California’s 1.3 million millionaires. Washington ranks 14th in millionaires among the 50 states — about in line with the population. (Washington is the 13th most populous state).
More than doubling the number of millionaires could be a good thing for the region if it leads to more capital flowing to innovative ideas, better schools, etc.
But will that actually happen?
Members of the Seattle technology community have been engaged in a serious debate about this in recent months. And one of the frequent sore points often revolves around the lack of angel investment for startup ideas.
You need millionaires — something we have — in order to have angel investors — something that’s lacking. And that’s where there appears to be a a bit of disconnect in the region. (More on this topic in an upcoming Q&A with L.A. venture capitalist Mark Suster).
In order to help overcome the hurdle, one thing that desperately needs to happen is for home-grown entrepreneurial success stories to emerge. aQuantive and Isilon are some recent examples, but for the region to truly be successful as a major tech hub more of those big hits need to occur.
But it is deeper than that.
There also will need to be a cultural shift in mentality where the ruling entrepreneurial class — the people who’ve already met with success at RealNetworks, Microsoft, Expedia, etc. — take it upon themselves to support the next batch of entrepreneurs. Is that happening the way it should?
Many in the community say it is not, despite the attempts of organizations such as TechStars to get things rolling. (This was a hot topic at a dinner conversation I attended last night with more than a dozen entrepreneurs and investors). It seems like the region is at a bit of a crossroads.
After all, just because there’s a lot of millionaires milling about doesn’t really mean there’s a culture of entrepreneurship, innovation or investment. (See Connecticut which has the highest concentration of millionaires in the country).
Washington state has a good base from which to start, but the jury is still out. There’s opportunity for a new set of angels to emerge, spending a portion of their money on incubating groundbreaking companies that will change the world. Or, the new millionaires could just decide to buy another yacht or mansion.
Adeo Ressi of The Founder Institute addressed this issue in a recent story on GeekWire, noting that the Seattle community needs to do more to get the wealthy investors off the sidelines.
“(There’s) a rather anemic group of venture capitalists, and a rather anemic group of angels. And so, if you ask why is that? It seems that you have a lot of entrepreneurs and executives at tech firms that have money, but for some reason they are not being enticed off the sidelines,” he said.
What’s it going to take to turn Seattle millionaires into angels?