Madrona Venture Group is in the money. Again.
The Seattle venture capital firm, a backer of Seattle area companies such as Redfin, Apptio, iSpot.TV and others, today announced a new $300 million fund that it will use to bankroll upwards of 30 emerging startups in the Pacific Northwest in the coming years.
It marks the firm’s sixth fund, equalling the size of the fifth fund which closed in 2012.
Demand was incredibly high for the new fund, and Madrona Venture Group’s Matt McIlwain said the 20-year-old firm could have raised much more given the interest among investors.
“We had way more demand than we were going to be able to accommodate,” McIlwain tells GeekWire. “Our scarce resource is our time and our ability to add value. Could we have raised a $500 million fund? No doubt in my mind.”
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But McIlwain said that a $300 million fund was the right size, allowing the partners to roll-up-their-sleeves and add value in an effort to “build big success stories over time.”
One important change is occurring with the Madrona team in fund VI as longtime managing director Greg Gottesman is moving to a part-time venture partner role. Gottesman will still be involved in the fund, assisting with various companies, but the Seattle venture capitalist and founder of Rover.com also is kicking around some new entrepreneurial ideas. Gottesman says he’s not quite ready to discuss that next chapter or what it may entail.
In terms of new partners being added to the lineup, McIlwain noted that three key strategic directors recently joined the firm: Isilon co-founder Sujal Patel; retiring F5 CEO John McAdam; and Concur CEO Steve Singh.
McIlwain said there are no current plans to add new partners, noting that the firm has six managing directors helping to drive investment decisions. “Only time will tell,” he said. “There are no immediate things to announce.”
Madrona is arguably the most important venture firm in the Pacific Northwest, providing much-needed capital to entrepreneurs from Vancouver, B.C. to Seattle to Portland.
In 2014, Madrona invested about $100 million in 27 companies in the Pacific Northwest— roughly 10 percent of the entire haul.
Since the firm plays at the early-stage, it is also worth noting the firm’s multiplier effect.
For each dollar invested by Madrona in early-stage companies in the Northwest, another 3.5 dollars flow to those startups. In 2014, Madrona and its syndicate partners — typically larger Silicon Valley venture firms that last year included 26 new major investors — sunk $463 million into the region.
That’s a big amount for Washington state and Oregon companies, more than any other firm and about 40 percent of the region’s total venture capital.
There won’t be a change in focus at Madrona in terms of its capital allocation or geographic range.
“We like our strategy,” said McIlwain, adding that the strategy has strengthened as the tech ecosystem has matured in the Pacific Northwest. He added that there is great tech DNA in the market, from Microsoft and Amazon to many of the new engineering centers being established in the Seattle area. (See GeekWire’s list of engineering outposts here).
“The Pacific Northwest is one of the most innovative and important tech markets in the world with incredible talent, companies, and technology across sectors like cloud, SAAS, mobile and consumer,” he added. “Working with entrepreneurs inspires us every day, and with this new fund we look forward to that continuing for many years to come.”
Founded 20 years ago by a group of former lawyers and angel investors, Madrona scored big with bets on companies such as Amazon.com, Sharebuilder and Isilion Systems. More recently, the company saw positive exits when game maker Z2 was sold to King Digital; cloud startup Tier 3 sold to CenturyLink and online hotel marketing startup Buuteeq sold to Priceline Group.
The new Madrona fund marks the second raised by a Seattle area venture firm in the past three weeks. Last month, Bellevue-based Ignition announced a $200 million fund, with a focus on early-stage deals in the enterprise software arena.
Previously on GeekWire: The mighty Madrona: Why one VC firm is so critical to Seattle (and why that’s a little scary)