There’s something in common with the last three companies to go public in the Seattle area.
That would be Madrona Venture Group, which was an early investor in Impinj (IPO in July 2016), Apptio (IPO in September 2016), and Redfin, which debuted on the Nasdaq exchange on Friday morning.
Tech-powered real estate brokerage Redfin priced its IPO at $15 per share Thursday night, with the shares opening Friday morning at $19.56.
Given the recent success, one needs to ask: What’s in the water over at Madrona?
Madrona was an early backer of Redfin — it helped recruit current CEO Glenn Kelman — and held a 11.4 percent stake at the time of the IPO. Redfin was valued at about $1.2 billion at the time of its IPO, marking yet another successful outcome for Madrona.
But it’s not always been an easy road for Madrona, and the exits certainly have not come quick. For example, Redfin was founded 15 years ago. The wait on Impinj, which is now trading at more than $50 per share, was even longer. It was founded in 2000.
Even so, perhaps good things do indeed come to those who wait.
RFID-maker Impinj, meanwhile, raised some of its initial investment from Madrona in the early 2000s, and the firm participated in each round of financing before the company went public last summer. Madrona held a 9.4 percent stake in Impinj at the time of its IPO; the company has seen its stock price soar more than 170 percent since last year. It is valued at $1 billion.
When Apptio went public, Madrona was the largest outside shareholder, holding a 16.7 percent stake, and helped fund the company’s growth from the beginning. Apptio, which makes software to help CIOs better understand spending in IT departments, has seen shares drop by more than 20 percent since it tested the public markets. Its market cap is hovering around $700 million.
It’s been a nice run for Madrona, founded in 1995 by a group of former lawyers and angel investors, and particularly at a time when so few companies are testing public markets. Impinj and Apptio were two of just three Seattle-area companies to have an IPO in 2016; none went public in 2015.
Just 27 life sciences and tech companies completed IPOs in the first half of 2017, down substantially from 2014 and 2015, according to a report from Fenwick & West.
In its 22-year history, Madrona has seen only a few other tech companies in its portfolio go public, including North Carolina-based MaxPoint in 2015 and Isilon Systems in 2006, which was later acquired by EMC in 2010 for $2.25 billion.
The firm, which raised $300 million for its sixth fund in 2015, is also an investor in pet-sitting platform Rover, which just raised a $65 million round, and PayScale, which both are pegged to go public soon.
Outside of the public markets, Madrona saw big returns recently when Apple acquired machine learning startup Turi, which raised its Series A from the firm, for $200 million last year. It was also a large investor in Placed, another Seattle startup that was swooped up by Snap in June for more than $200 million. Apple also acquired another Madrona company, Lattice Data, in May.
Madrona Managing Director Matt McIlwain recently wrote a blog post titled “Partnering from Day One with Founders.”
“It is a privilege to work with companies from Day One – and we celebrate the founders who have the persistence, grit, and humility paired with the conviction to build a business, nurture a team and partner with both us and also the important industry stakeholders to move their company forward,” he wrote. “We have been on a similar journey with many other companies including Rover, Redfin, Turi, Lattice, Apptio, and Impinj – to name just a few that have been recently in the news, and look forward to applying our learnings and experience to working with new Day One founders.”
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.
“Greater Seattle has a wealth of talent, research and entrepreneurial spirit,” Madrona co-founder Tom Alberg told GeekWire on Friday. “This is the place where people are building businesses that will drive both our local economy and the global economy for years to come. We believe strongly that our investment philosophy of investing early and locally in great teams with market changing ideas will continue to support Seattle’s impact and are excited to see what the next 20 years brings.”
However, as noted in the past, Madrona’s outsized impact could actually be a concern for the region, given how few firms exist in comparison to other tech hubs like Silicon Valley. The area has long been critiqued for its general lack of investors, both from the angel side and VC.
