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Fred Wilson.
Fred Wilson.

Fred Wilson probably didn’t expect much of a response after he called Seattle a “third-tier” startup city earlier this week. But his blog post that outlined the quality of U.S. startup cities certainly hit a nerve with many folks who defended Seattle as a premier technology and startup hub.

Now, the venture capitalist is backing off his initial statements, going as far to say that “something is really quite special about Seattle.”

Wilson penned a short blog post Monday about the different dynamics between first, second, and third tier startup ecosystems as it relates to both entrepreneurs and investors. He put Silicon Valley in the first tier and said New York City, Los Angeles, and Boston fall into the second tier.

Seattle
(Kurt Schlosser / GeekWire)

Seattle, meanwhile, was grouped together with cities like Austin, Boulder, Chicago, Atlanta, and Washington D.C.

“Entrepreneurs in the third tier can access the talent and capital they need to be successful in these third tier markets but it is a bit harder to do both,” Wilson noted.

This perplexed many, including Tren Griffin, a senior director at Microsoft since 2002 and a veteran of the Seattle tech scene, who responded with a series of tweets defending the region’s rich history of ultra-valuable companies like Microsoft, Amazon, Concur, F5 Networks, Expedia, and others.

Even folks like Silicon Valley venture capitalist Bill Gurley and Expedia/Zillow/Glassdoor founder Rich Barton chimed in.

Wilson responded to these tweets, noting that he wasn’t trying to diss Seattle or any other city with the initial blog post.

Wilson even wrote a follow-up blog post about this issue on Thursday.

“Here’s the thing that is amazing about Seattle,” he wrote, citing data from the National Venture Capital Association. “It doesn’t rank as high as NYC, LA, or Boston in the number of startups funded or capital invested. … But the companies that have come out of Seattle over the past thirty years put NYC and LA and probably even Boston to shame. So on a dollars in/dollars in, Seattle outperforms. By a lot.”

Both of Wilson’s posts generated more than 100 comments. The follow-up post about Seattle elicited response from people like Foundry Group Managing Director Brad Feld.

“Seattle is special,” Feld commented. “Part of the dynamic you are seeing is a much smaller funding base (less VCs). The smaller funding base is prevalent in many other markets and, when linked to a strong entrepreneurial talent base, generates a huge opportunity for both founders and investors.”

Here’s one from Sandi Lin, a former Amazon engineer who now runs a Seattle-based startup called Skilljar.

I’m a VC backed entrepreneur in Seattle (skilljar.com). IMO is Seattle is absolutely first tier for talent but third tier for investment, which is consistent with the data above. While the market should theoretically correct this imbalance, it hasn’t. And the gap will continue to widen as the AMZN boom is now generating more US work authorized talent. My theory – SF investors strongly prefer traveling to LA/NY as their secondary markets, plus few firms have the expertise or patience to develop B2B or enterprise. Consequently, startups in Seattle have turned to customer revenue much earlier in their lifecycle, worked tirelessly towards PMF, and are arguably stronger as a result. In a funding climate that is turning towards smart revenue growth, this “should” work in Seattle’s favor. But I remain skeptical since few outside investors are actually willing to actually place bets here.

Stay tuned to GeekWire for more on this topic. We’ll be publishing a commentary from Griffin on what other cities can learn from Seattle’s approach, and he’ll also be a guest on our next GeekWire radio show and podcast.

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