Seattle entrepreneur Tony Wright’s announcement earlier this week that he plans to relocate to Silicon Valley to build his latest company sent shockwaves through the startup community. It wasn’t so much that Wright — a well-respected and well-known startup vet who is now building a company called Tomo– was leaving.
That happens all of the time, with talented folks consistently moving between the two tech hubs. It was more about Wright’s reasons for leaving, bluntly pointing out in a blog post that Seattle’s investment climate for early-stage ventures was “merely adequate” and noting that it’s “easier to keep your optimism tank full in the Valley.”
The comments stung, sparking a group of entrepreneurs that included SEOMoz’s Rand Fishkin, Appature’s Kabir Shahani, LikeBright’s Nick Soman and more than a dozen others to pledge to devote up to five percent of future startup winnings to ventures in the community.
As I pointed out last week, Seattle does have a problem with its venture capital ecosystem when some of the region’s top deals over the past year — Zillow’s blockbuster IPO, PopCap’s sale to Electronic Arts and Double Down’s acquisition by IGT — were NOT bankrolled by Seattle investors.
As I told PandoDaily’s Trevor Gilbert this week, it’s perplexing that — given the wealth created by Seattle area companies like Expedia, Microsoft and Amazon — more money isn’t recycling through the startup community.
Seattle angel investor Chris DeVore has been harping on that issue for a while now, and this week the creator of Founder’s Co-op pointed out yet another problem which is holding back angel investing. Something he calls “grinding,” the idea that investors spend so much time on the price of the deal that they miss the bigger opportunity.
Entrepreneurs are at their most vulnerable when they need money, and “grinding” — taking advantage of that vulnerability to try to eke out a little more return for yourself — is the worst kind of relationship-poisoning, short-sighted behavior you can engage in — if you believe that the really big gains in enterprise value are still ahead of you (and if you don’t believe that, why the fuck are you investing at all?!).
As DeVore writes, trying to nail down the problems in the Seattle startup ecosystem is a complex topic. But we’re going to tackle some of the issues this week on the GeekWire podcast, with Wright as our guest.
In the meantime, please let us know in the comments below if you have questions or ideas you’d like us to explore on the show, or specific questions for Tony Wright.