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Houses dot the hillside in the Magnolia neighborhood of Seattle, with the city skyline in the distance. (GeekWire Photo / Kurt Schlosser)

It’s now well established: Seattle is cloud city. But in the shadow of major platform players Amazon and Microsoft, a growing ecosystem of software-as-a-service startups is also attracting investment and helping define the next generation of Seattle cloud companies.

GeekWire worked in conjunction with PitchBook to produce the graphic below, listing and mapping 10 of the major Seattle-area SaaS investments over the last couple of years by their valuation. Seven of those companies call the West Side home, while three are doing business across the lake in Bellevue.

(Pitchbook Image)

The graphic shows that SaaS, or enterprise software that is completely managed by a third party, has become a growing part of the Seattle scene, which has traditionally been dominated by the big cloud infrastructure-as-a-service companies like Amazon Web Services and Microsoft Azure and a number of platform-as-a-service startups like Chef. It’s those three layers — software on top, platform in the middle, infrastructure on the bottom — that make up what we know as cloud computing, and the Seattle area is home to companies most the industry forward in all three categories.

Seattle’s Avalara, founded in 2004, tops PitchBook’s list thanks to a $50 million round in 2016 that Pitchbook estimates valued the company at $1 billion. Bellevue-based Smartsheet, thanks to a $52.1 million round in May 2017 with a pre-money valuation of $800 million, comes in second.

(Pitchbook Image)

Most of the companies on the list are working on business productivity software, from Avalara’s tax planning tools to Auth0’s identity-management software. And one interesting nugget from PitchBook’s raw data is that the top five companies on the list are working on a Series D round or later, suggesting that they are looking for a late-stage boost in order to become profitable or sell to a larger company.

But that’s also symptomatic of a larger national trend in startup funding — and especially SaaS funding — that PitchBook statistics show. There has been a sharp decline in the number of new SaaS deals as well as the valuations attached to those deals, as more and more SaaS companies find themselves competing against each other rather than the slow legacy giants they stepped over on their way to success.

Thanks to PitchBook for compiling this data, and we plan to bring you more data-driven insights into the cloud boom in Seattle and beyond over the year to come.

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