Madrona Venture Group is expanding its physical footprint in Seattle with a new innovation space for founders and startups.
The venture capital firm has signed a 10-year lease for another 20,000 square feet on the floor directly below its existing office at the Wells Fargo Center in downtown Seattle.
The space, which doubles Madrona’s footprint, will be a combination of a co-working area, startup studio, event center, and more. It will house Madrona portfolio companies, including those in Madrona Venture Labs, as well as outside startups.
The expanded space opens this summer with room for more than 100 people. It will be similar to co-working models like WeWork or Galvanize, but unique given its location inside one of Seattle’s top venture capital firms. It will function more as a place for small companies and founders to build companies, versus a floating desk environment, for example.
The Madrona Venture Labs startup studio will be the anchor tenant in the new space. Madrona is still working out details of membership pricing.
“Whether you are a Madrona portfolio company or you’re not a Madrona portfolio company, the expectation is that there will be some charge for the space,” said Madrona Managing Director S. “Soma” Somasegar, who is leading the new project with fellow managing director Scott Jacobson.
Madrona could follow a similar model to that of WeWork. The $20 billion co-working operation behemoth makes money by renting office space — $450 per month for a private office, for example. Members also get value from being in the WeWork network, connecting with other entrepreneurs.
Madrona is also focused on how a co-working space can increase collaboration between its portfolio companies and others.
“We’ll also have what we call ‘programming,’ to make it valuable and a place where the community wants to come together and meet and interact and work on new ideas,” Somasegar said.
This isn’t a completely new idea. Seattle-based iStartVentures tried to do something similar in the late 90s with a 16,000 square-foot incubator in Pioneer Square, but went out of business after the dot-com boom. CMGI was another well-known incubator but also crumbled in the early 2000s. In this New York Times article from 2000, it noted that “a year ago, CMGI was the model incubator, a new corporate creature somewhere between a conglomerate and a venture capital fund.”
Madrona already operates a makeshift incubation space where entrepreneurs from Labs and other startups work, but capacity is constrained. When the floor below became available, the firm saw an opportunity to not only provide more room for its own entrepreneurs, but the larger Seattle tech community.
“Our intent and goal is to figure out how we can do our part in contributing to the continued growth and expansion of the startup ecosystem,” said Somasegar. “This investment is primarily geared toward that.”
This is Madrona’s latest creative initiative that goes beyond its traditional investment model. In addition to Labs, which launched in 2014, it also runs a “Madrona Pioneers” program, consisting of a small group of angel investors in the region that essentially operate as a feeder system to Madrona.
Founded in 1995, Madrona raised $300 million for its sixth fund two years ago. The firm’s investments have had an outsized impact on the Seattle startup market, starting with co-founder Tom Alberg’s early investment in Amazon.com, and extending to companies such as Redfin, Apptio, Impinj, Qumulo, Smartsheet, Amperity, and many others.
There are a bevy of co-working spaces in Seattle, many of which continue to expand. WeWork, which already has five locations in the region, is doubling its Seattle-area footprint this year. Others include Galvanize, The Riveter, Thinkspace, and CoMotion Labs, which has co-working space at the University of Washington’s Fluke Hall, CoMotion HQ, and Startup Hall, where the Founders Co-op venture capital firm is also based.