Order Mapper founder Jim Bricker tried to raise seed capital in Seattle. But the former Microsoft and Avanade developer didn’t have much luck, so he relocated to Dallas for the Tech Wildcatters accelerator.

Now, he’s on the move again. The Vegas Tech Fund, the venture capital fund of Zappos founder Tony Hsieh, just took a gamble on Order Mapper. And as part of the $550,000 funding round, Bricker has decided to put down roots in Vegas. His Seattle teammates may come with him.

“There seems to be more support for smaller startups outside of Seattle,” says Bricker, who earned an MBA from the University of Washington and whose company was one of the first to participate in Microsoft’s BizSpark program. Investors in Seattle, he said, are just too consumed with revenue traction. In other words the early, pre-revenue startups like Order Mapper are kind of stuck.

Ouch.

Those types of statements can really sting in Seattle. But they are not uncommon. And they are playing out in coffee shops and industry events all over the city.

The pool of investors writing checks to seed-stage companies is small, driving some entrepreneurs to other locations  — like Vegas. This isn’t the first time that Sin City has snapped up a Seattle startup. You may recall that mini-robot maker Romotive moved there after graduating from the TechStars Seattle incubator.

Sin City, through the efforts of Hsieh and others, is trying to become Startup City. And it’s not alone.

Tony Hsieh (Wikipedia Photo)

With the so-called series A crunch in full swing, entrepreneurs (especially young and mobile folks) will go where capital is accessible and quality of life is high. Vegas is making that play.

One of the rubs on Seattle is that the pool of angel investors is not that deep — a perplexing issue given the huge pockets of wealth created in the city in the past 25 years.

Some of the wealthiest folks in Seattle — like Paul Allen and Jeff Bezos — dabble in startup investing. And there are some newcomers to the angel scene — well respected folks like Andrew Wright, Sujal Patel and Rudy Gadre —who’ve boldly hung out their angel shingles.

But there’s no brand name angel investor with the drawing power of Hsieh or the connections of Ron Conway or the rabble rousing of Dave McClure. Seattle needs some of that flowing into the startup community at heavier doses than is currently being administered, if it wants to establish itself as a go-to startup city.

In other words, we need 10 or 20 Sujal Patels or Rudy Gadres. A few more Madronas and Ignitions wouldn’t hurt either.

There’s also nothing quite like the Vegas Tech Fund in Seattle, whose mission is to turn the city of Las Vegas itself into a startup incubator. Does Seattle need something like that — a unifying startup force that gets some more momentum behind the earliest of startups?

The naysayers will say no, pointing out skeptically that there’s no guarantee that Vegas will achieve anything with its grand experiment. But money is flowing. Bets are being made. Ideas are being tested. People are moving there.

And here’s a counterpoint for the naysayers: Startups aren’t about saying no, they’re about saying yes.

Order Mapper, which is trying to change the way people order pizzas, flowers and other goods, could help put Vegas on the map. Or not. Many will simply write off the company as a silly little app.

Jim Bricker

But big things can come from small ideas, and the tiniest bit of cash can help. Just ask the folks behind Box.

A little bit of seed cash would have helped Bricker. He probably wouldn’t have moved to Dallas initially if an angel appeared on the rain-soaked streets of Seattle.

“Cities like Dallas and Vegas are great places for startups right now,” said Bricker. “Much better than Seattle or the Valley because the cost of living is so low.  Vegas appealed to us because of what the Vegas Tech Fund and the Downtown project is building. It wasn’t an option before.”

Don’t get me wrong. There’s a lot percolating in Seattle, and I certainly wouldn’t trade our position for one around the slot machines of Vegas.

But things move fast in the tech world, and it seems to me that Seattle (which has seen venture firms close up shop and scale back) now has a choice to make.

Here’s my recommendation: It’s time to get seeding! 

Comments

  • http://twitter.com/alwaysbshipping Tom Leung

    Amen John. If it’s possible to invest half a billion dollars for a world-class basketball team/stadium, you’d think a world-class startup ecosystem should make the cut as well ;-)

    • johnhcook

      Well said Tom. In fact, the thing is, I don’t think it would take $500M. I think real impact could be made with $50M to $100M.

      • http://www.facebook.com/people/Olivier-Fontenelle/1519239615 Olivier Fontenelle

        The W-fund at the UW (standing at around $20 ish) is specifically targeting seed-stage entrepreneurs. Funded by the state, supported by Seattle’s biggest VCs. The model exists, and i’m sure that within the coming years, it will only get bigger. Michael Young at UW is doing a great job of understanding our city’s great entrepreneurial spirit and strength in that area ;)

        • Guest

          You’ve got to be kidding. UW is effectively a startup killer by absorbing most available funds in the region for itself. From then on it’s all pretend entrepreneurship for faculty who just want to supplement their research budgets. Not to mention that the distribution is very political. The truth is they compete with the city’s startup community.

          • Guest

            …for recources.

  • Guest

    As someone struggling to raise seed capital in Seattle, I can relate to the problem. Early, pre-revenue startups are indeed stuck. Also, the Seattle community is very small and if you are an outsider, tough luck. Not only we need more people investing but we need to change the mindset to be more SV-like.

    • http://twitter.com/RedRussak Red Russak

      As a heads up, for you outsiders…we have resources available – http://startupseattle.com/resources – and it’s only going to get better with your help. If everybody who wanted to see change were to jump in together and GSD…then we’d see change. Want us to be more SV like? Pitch in.

      • johnhcook

        Thanks Red. GeekWire also has a list of Startup Resources available, including lists of service providers, broken into 35 different categories, from real estate and PR to venture capital and Web Development. You can check out the Startup Resources center here:

        http://www.geekwire.com/startup-resources/

  • Bill Bryant

    Boy, am I getting tired of these kinds of stories. Is it possible, perchance, that OrderMapper was just not a good idea as a scalable business that would provide a return to investors, and that Seattle angels made a good decision? Just because the company finds backing elsewhere doesn’t mean that Seattle investors made a mistake ! Why is it that entrepreneurs believe that it is their birthright for “well heeled investors” to shower them with cash for Not Very Good Ideas?

    Do we miss a few that later go on to great success? Absolutely. Twilio and Box come to mind. But, Lord, if we’re going to start having angst about what Las Vegas is doing to compete for startups, well, I’ve got better things to do. Las Vegas will not rival Seattle as a technology hub in my lifetime.

    When Guest makes a comment like “Seattle’s community is very small” it tells me two things – he or she hasn’t been here very long (the community is exponentially larger today than it was 5 yrs ago – see Geekwire 200 and compare to whatever was around circa 2006), and he/she hasn’t spent time in truly small markets – like Las Vegas.

    I do agree with John that we could use another 100 angel investors but seriously, let’s stop ripping on how bad Seattle is as a startup hub. Its wearisome.

    • Guest

      I have been here for 3 years and I was comparing the community to Silicon Valley. Really, how many (relevant) VCs do we have here? Four, five? Even worse, each one of them specialize on some area (Ignition: cloud/enterprise, Maveron: consumer, etc.). Nothing wrong with that, but the fact is the community is very small. And don’t get me started on the angel community… The fact is, unless you are very well connected in the area, you are better off trying to raise elsewhere.

      • Thomas R.

        Bill, John and I had an interesting discussion about this topic earlier on this article: http://www.geekwire.com/2013/ignition-partners-leaving/ Worth a read.

        • johnhcook

          Bill, I totally agree that the Seattle community is light years ahead of where it was 5 or 10 years ago. Big Valley companies like eBay, Splunk, Google, EMC, Facebook, Salesforce, etc. feel like they have to have a presence here. Amazon is going gangbusters, and anchor tenants such as Microsoft and Expedia are still huge. A new breed of companies like Apptio, INRIX, Tableau, Zulily and Zillow are emerging here.

          I know of no other region outside of the Bay Area that has that kind of dynamic mix of tech juggernauts, combined with a thriving startup ecosystem. It’s an awesome place, and I certainly would not want to go back to where things were 5 or 10 years ago, or, as I said in the column, to Vegas.

          That said, I do think it is important to point out that there is (at least in my view) a problem when it comes to angel and early-stage financing. That’s what I was getting at here.

          I am not sure if Order Mapper will make it, but they are not alone in their frustrations in uncovering capital in Seattle. I hear it all of the time from entrepreneurs (and investors).

          The thing that just keeps perplexing me is that Seattle has an amazing ecosystem of big, important tech companies — and there has been an enormous amount of wealth created here in the past 20 years. Yet, it seems there’s just a lot of that capital that is locked on the sidelines, not getting recycled into the startup community.

          I’ve often said the thing Seattle really needs is some crazy, off-the-charts style acquisition where a homegrown tiny startup (bankrolled largely from Seattle angels and VCs) gets acquired at some insane valuation on the level of Instagram.

          I think that could wake up more folks to the real money that can be made in angel investing. Until we see something like that, I just fear that money will remain on the sidelines.

          Yes, it is true that Seattle angels and VCs may pass on some real duds. I just hope it doesn’t happen at the expense of losing out on the gems.

          jc

    • Founder in Seattle

      I don’t think anyone is ripping on Seattle. Isn’t it healthy to ask ourselves how we can be the best startup hub we can be? At some point, it’s not unreasonable to ask ourselves why aren’t there more than 5 Geoff Entresses and one Madrona in a city as awesome as Seattle.

      Furthermore, I think there is a chicken and egg problem here where many founders who left Seattle or never moved here in the first place are the result of not enough investors. Some will say there aren’t enough great founders here but I’d argue the way to develop and attract the most top tier founders in Seattle is not to have a handful of angels and 1 active VC.

      This is where our local millionaires and billionaires have an opportunity to get the startup flywheel spinning a lot faster. No slam on the current investors, founders, and accelerators — just that a city as great as Seattle needs more.

      • Guest

        It’s the same problem that Michigan had with GM. Microsoft, the 800lb gorilla in Seattle effectively has killed a truly flourishing and diverse ecosystem. For a region the size of Seattle the startup community is quite pathetic. Heck, cities like Vegas and Austin are eating our lunch right now.

    • Forrest Corbett

      Bill, the questions you raise about OrderMapper are valid. However, I’ve seen quite a few seed stage startups have to seek funding outside of the area. There’s a pattern. As a whole, Seattle is a good startup hub and I don’t think John is saying otherwise. What he is pointing out is something I have experienced as well, and that is other areas are more welcoming to seed stage startups. I don’t think John is inventing a problem – he’s citing a possible example of it. If we acknowledge the problem, then the question is: how do we make Seattle better for seed stage startups?

  • http://www.facebook.com/aaron.a.bird Aaron Bird

    I agree that we could use more angels making more bets. I think you are also right on that Seattle angels are somewhat risk adverse as compared to the Valley (and maybe Vegas?) and like to see traction around revenue etc before making bets, however I think your assessment in this article on the current state of the ecosystem is misdirected and I don’t think you are giving enough credit to the folks that are dedicated to making it thrive (and are very much responsible for the growth we have seen in Seattle over the past 5+ years).

    For example, “But there’s no brand name angel investor with…” Really, what about Geoff Entress? Or Bill Bryant? Or Andy Sack?

    In addition, “There’s also nothing quite like the Vegas Tech Fund in Seattle, whose mission is to turn the city of Las Vegas itself into a startup incubator.” I disagree, I think Andy & Chris’ impact with Founder’s Co-Op & TechStars is exactly that. That is exactly their goal and they are doing a great job by any measurement.

    • johnhcook

      Thanks Aaron. We are very much in agreement here.

      Bill Bryant, Geoff Entress, Andy Sack, Chris DeVore, Rich Barton, etc. certainly are carrying the torch in the NW, and this article was not meant to diminish the role they (and many others) play. We need more of them too. And I think that’s while you’ll find many of these folks (and the groups they are associated with) routinely featured in the pages of GeekWire.

      By brand name angel, I mean someone on a national scale, with national name recognition and also huge wins under their belts. Folks like Chris Sacca or Ron Conway or Vinod Khosla .I don’t think we have that here in Seattle. If you look at any list of the top angels in the U.S. (and granted any list is flawed to begin with) rarely is a Seattle investor mentioned.

      Now, I’ve called bullshit on some of these lists in the past when they’ve left off people in the NW I’ve felt are deserving but were fogotten — such as when I called out Forbes for leaving off Madrona’s Matt McIlwain on its “Midas List” a few years ago.

      Here’s the deal: Look how much money has been created in Seattle over the years — an enormous amount of wealth at Amazon, Expedia, Microsoft and others. Yet, for whatever reason, there just hasn’t been a brand name angel on the scale of what you see in the Valley to emerge from this group. Chris DeVore himself has written extensively about this problem, and in my own conversations with those in the startup biz, it remains a topic of continued consternation. Why is this?

      Furthermore, if you look at some of the top venture-backed exits in the NW in recent years — very few had Seattle angel/VC money in them (or very little). Zillow, PopCap, Double Down didn’t have cash from the usual suspects in the angel or venture community. (Swype and Isilon certainly are counter examples to this, and there are a crop of rising stars on the horizon who are possibly poised for big things too).

      The fact is, as I’ve noted before, Seattle angels need a huge win on the scale of an Instagram. I do think that will change things — dramatically. Almost overnight. Seattle angels just haven’t had a homerun of that level — or at least that’s my impression of how things have played out in recent years. (I am sure someone will correct me here if I am wrong!)

      Don’t get me wrong. TechStars is a great addition to the community, and it is doing a lot to draw in talent and incubate startups here in the region. Founder’s Co-op and CodeFellows also are great additions. (Probably just too early to declare any of these a success — just as is the case with the Las Vegas Tech Fund)

      I just think more needs to be done — which I think we all can agree with. I hope Bizible will help get us there.

      Thanks again for the great comment Aaron. Really got me thinking.

  • http://www.facebook.com/john.richardson.142035 John Richardson

    I am prepared to be a seed investor, but not to pay a bunch of salaries so 50 people can take two years to create an iPhone app and hire their (want to be) girlfriends and boyfriends.
    I am interested in true boostrap startups in which the founders are not looking for a salary or living expenses from the investor, and need 10k-30k to get over the hump with hosting, initial production, etc.. Sort of like a small kick starter in a way.

  • joewallin

    John, the Washington State legislature is now in session. Could you help me promote this idea?

    http://www.startuplawblog.com/2012/07/25/washington-state-needs-its-own-crowdfunding-law/

    Washington State could be a national leader in this movement. But we need people to push it.

  • RobertinSeattle

    There are a lot of unique aspects to the Seattle area, good and bad. But being different is a good thing and it’s also the reason why Seattle is home to companies such as Microsoft, Amazon, Drugstore.com, Expedia and so many many more.

    There are a couple of very interesting things I’ve observed in having raised money and started projects here: As a result of the phenomenal growth of so many of these tech giants here in the Puget Sound region, you have an enormous base of very wealthy (at least paper rich in some cases) and relatively young tech workers. The majority of these people are not particularly risk-takers or brilliant startup entrepreneurs with lots of fresh ideas. As a result, I’ve realized that most end up staying at their corporate jobs continuing to accumulate their options and growing their 401K’s (do you blame them?) while often being bored at their jobs. Occasionally, some of the more brilliant ones will wander off and create a cool startup with some of their buddies, often with their own money simply by cashing out some of their options.

    On a side note, over half the early-stage investors I’ve worked with over the years in this area have their money made from old-fashioned investments and less so from tech investments or options.

    Often, it’s been a difficult cycle getting new projects off the ground initially because it’s tough breaking into some of the circles here in Seattle, as some of the other comments have also alluded to and as your article also points out. Personally, I’ve found the Seattle scene to be all too often very clique-ish and clannish. If you don’t belong to this group or that one, or if you never belonged to the right fraternity at the right college, you’re treated as an outsider looking in. But the whole point with entrepreneurs and startups is that most of us and our ideas are think-outside-the-box not to be judged as a bad fit simply because someone thinks we don’t belong.

    Then you have all the countless groups with all their incessant “competitions” a la Survivor to see who can make the best pitch to get the few startup dollars they dangle publicly while the VC’s lurk in the background pretending to be angel investors “providing protection and guidance to all those naive angel investors.” I would have to concur with the general thought in your post that real and active angel investors are fewer in number here than I’ve seen elsewhere. Which was the real point to Jim Bricker moving his startup down to Las Vegas. I wish him all the best in his venture! I have a feeling his project’s really going to take off!

  • http://twitter.com/AndySack Andy Sack

    +1 for Bill Bryant — especially, I do agree with John that we could use another 100 angel investors but seriously, let’s stop ripping on how bad Seattle is as a startup hub. Its wearisome.

  • A Seattle Startup Guy

    For fucks sake people, we’ve got not one not two but three yearly techstars accelerators that seed fund 30 companies. They’re even under-saturated and in need of more quality founders for what they have to provide. Does it matter where their A comes from? Of course we could use more angels, but from those angels I’ve talked with, the lack of quality founders and viable business ideas is actually the problem.

    Echoing and expanding on Bill’s point, maybe the issue is just that we don’t have enough bad or wreck less angel investors in Seattle?

  • http://www.scoutzie.com/?utm_source=disqus&utm_medium=display_name&utm_campaign=disqus_display Kirill Zubovsky

    I love Seattle, wonderful city, but I now live in the Valley. It is true that while in Seattle, no one but one person invested in our company and that our investments came from the Bay. Seattle investors are more risk avers, and that’s totally fine; individual angels just have a lot less room to gamble so they are forced to pick bets in ways that seem most successful to them. In Seattle, that’s revenue … you know what, it is either revenue or user growth in the valley too. Contrary to popular believe, not that many (sophisticated) investors actually give money to dumb shit with no business model.

    Anyways, I digress. Our investors didn’t actually care whether we lived in the valley or stay in Seattle. In fact, they may have preferred Seattle since the burn rate is much much lower. But, we moved to the valley. You know why? Because down here no one is bitching and moaning about not being somewhere else. Down here people are just working day and night like hungry dogs. Go on, walk by a startup office in Palo Alto at 10pm, chances are you will find everyone working.

    If only everyone just stfu and kept working… but working doesn’t make headlines.

    • Pradeep Chauhan

      Great comment Kirill.
      Its a chicken and egg problem and as startup folks, should be least surprised by this. Part of a startup’s job and I guess differentiator is to find a way to hack it…

      btw- With Angel List + Second Market your funding options are global, why limit yourself to Seattle?

  • guest

    I love how the old guard of investing in Seattle say that it’s wearisome. It sure is. So many of us have stories about the previous crop of investors that increasingly look like they’re on their way out, and it doesn’t feel shocking or surprising. It’s ripe for change. I can’t wait for the new wave of investors to make their mark. People are hungry for it.

  • RunTheNumbers

    Small sample size. How on earth can one company’s experience be a reflection of the entire area?

    I didn’t read a failing of PacNW angel investing in this story at all. What I read was a “company” that doesn’t make any money — no, scratch that, doesn’t have any revenue — but has an idea, and they couldn’t sell it to local investors. However, they did find some takers in Las Vegas, which has a goal of becoming a tech hub.

    Without details of the pitch and the ask, this is way too generalized to draw conclusions about the state of regional early-stage investing.

    • johnhcook

      Just to be clear, I used the story of Order Mapper as my hook to tell the larger story of something I’ve been seeing in the Seattle area — a lack of early-stage capital available. Order Mapper is one example — but there are plenty of others who’ve found the market here in Seattle for angel financing rather difficult.

      Check out Tony Wright’s remarks as way of another example:

      http://www.geekwire.com/2012/tony-wright-set-sail-silicon-valley-entrepreneur-good-deal-terms-hard-find-seattle/

      If you go around Seattle and talk to people in the startup community, which is something I do on a daily basis, you’ll find that the Order Mapper experience is not unique.

      The folks I talk to — both entrepreneurs and VCs — are concerned that there is a funding gap in Seattle. I wanted to draw attention to that in this post.

      Things are going well in Seattle’s larger tech community — but I’d posit that capital investment is not the region’s strong suit at the moment. OVP is closing down, Frazier Technology Ventures pulled the plug, Ignition is scaling back and doing most of their investments outside of the region. There are only a handful of angels that entrepreneurs feel they can pitch here, and if you don’t hook one of them, then, well, you are out of luck.

      As I said in the post, I would not trade Seattle for Vegas. But folks here need to think about the problem, and possible solutions. Some folks are doing that — TechStars being one example with accelerators tied to Kinect, Windows Azure, Nike, etc. But that’s just one effort, and I’d say more needs to be done.

      I was just talking to an entrepreneur last week, who has raised some seed money from Seattle backers, but can’t get the next round done here and is finding more luck in NYC. He’s considered moving there, and still may.

      If there was a class of 30, 50 or 100 different angels in Seattle, it could be easier to raise cash — for a plethora of different opportunities. And, as I see it, that would be a good thing for the region.

      jc

      • RunTheNumbers

        Fair enough, and this story has been played out before. I have no doubt that there are plenty of teams that find funding options local to Seattle rather limited. Around Seattle, the entrepreneurs are a regional strength. However, I don’t think that makes a strong case for Dallas or Austin or Las Vegas or North Dakota or any other wanna-be technology hub that’s simply using a bunch of lower-cost investments as a way of drumming up business for later, larger entity hopefuls to show up.

        But I have a question. Why does investment need to be local? (Andy, Bill, others — please chime in.) If Seattle doesn’t have a great angel community, so what? If there are others out there willing to invest in my awesome idea, why would they care where I’m located (outside the cost factor?) I can understand why the Vegas fund is interested — they want you to move your operation to town. It’s part of a bigger strategy to move people to a location that’s seen the local economy devastated by the financial and real estate collapse five years ago.

        I would posit the funding machine that drives new businesses needs to think more virtual, and not in a geographical sense. That just seems too limiting.

        • johnhcook

          Certainly, the story has been played out before, but it has taken on added importance in recent weeks with news of the demise of OVP and the scaling back of Ignition.

          There’s a scenario brewing where there could be just one or two prominent VC firms in Seattle going forward — a scenario that I think could pose real trouble for the region’s startup community.

          You are right that Seattle entrepreneurs can always pull cash from outside the region — and they typically do tap the wells of NYC or the Valley for bigger, later-stage rounds (recent examples include Apptio, Zulily, Smartsheet, etc.).

          But, I’d argue, that true early-stage investing is inherently a local business. It’s hard to get someone from the Valley to make a $150,000 investment in a Seattle startup — when they’ve got a list of 20 or 30 deals they could do in their own neighborhood with people they know.

          That’s why I think it is important to have a strong, local angel network, coupled with a strong early-stage VC industry. Seattle has opportunities here, and I am excited to see some new entities fill the void, perhaps with folks like Rudy Gadre or Sujal Patel.

          The way angel deals get done through models like Angel List and Kickstarter leads more to the virtual model you describe, and it will be interesting to see if that really takes off. My guess is that, for now at least, the majority of angel deals are still getting done through relationships built from personal interactions of bumping into someone at a tech event or a sporting event or at theater performance.

          jc

          • RunTheNumbers

            I agree on the VC end for Seattle — the lack of major players here is really a sore thumb.

            I guess I look at the environment and wonder if the successful growth of the startup community in the next ten years is contingent on the successful growth of local investing.

            The internet seems to be making the world an impossibly smaller place. After a while, everything will seem local.

  • mark

    the article hints at, but ignores a huge fundamental. the cost of living in Seattle is outrageous compared with Phoenix and Dallas. If, as one of the people mentioned, a person received $550,000 in start-up money, what would that accomplish here. After all, each investment round is also used to pay the founders and early investors something. That’s a mediocre home here. It’s a rather short lease for commercial space. It wont buy many dev hours in a tight labor market in an expensive community. Here you can’t find the young, smart, cheap guys. Those guys are leaving. If they do stay it’s because they got the big bucks from a local large company. no matter what seattle does you can’t change this fundamental easily.

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