Trending: The buzz is building for Amazon’s HQ2

OfferUp office in Bellevue, Wash.

Seattle-area companies continued raising cash at a record clip during the third quarter, raking in $855 million across 88 deals, according to the latest PitchBook-NVCA Venture Monitor.

Total venture capital raised was up nearly 80 percent from the year-ago quarter, but total deal count only increased by 11 deals for Seattle startups, following a national trend of more dollars going to fewer companies.

The third quarter ranked as one of the highest capital raised in history, and follows the $826 million and $824 million raised in the first and second quarter, respectively. In the first quarter of 2000, $1.1 billion was invested into Washington state companies, according to a separate MoneyTree report. So, we’ve not yet hit the crazed frenzy of the dot-com boom era in Washington state, at least.

Even still, things are hot in startup land. A corporate securities attorney in Seattle recently told GeekWire that things are boiling right now, and that the fall will be an especially busy time for new deals.

Washington state’s recent tally still pales in comparison to the Bay Area, where companies raised $12.4 billion last quarter. But it shows increasing attention being placed on Seattle startups, both from local investors and those elsewhere.

Giant rounds for later-stage startups including OfferUp and Convoy helped drive much of the investment in Seattle. Here are the most valuable startups in the region, according to post-money valuations from PitchBook data, based on most recent fundraising rounds:

  1. OfferUp, valued at $1.4 billion (last investment: Aug. 2018, GeekWire 200 rank #11)
  2. Convoy, valued at $1.1 billion (Sept. 2018, GeekWire 200 rank #27)
  3. Rover, valued at $925 million (May 2018, GeekWire 200 rank #18)
  4. Spaceflight Industries, valued at $750 million (March 2018, GeekWire 200 rank #62)
  5. INRIX, valued at $584 million (Nov. 2014, GeekWire 200 rank #36)
  6. Qumulo, valued at $553 million (June 2018, GeekWire 200 rank #41)
  7. Auth0, valued at $520 million (May 2018, GeekWire 200 rank #12)
  8. Outreach, valued at $515 million (May 2018, GeekWire 200 rank #26)
  9. Porch, valued at $500 million (Jan. 2015, GeekWire 200 rank #9)
  10. Privateer Holdings, valued at $490 million (May 2015, GeekWire 200 rank: NA)

PitchBook reported that total investment in U.S. venture-backed companies reached $27.3 billion last quarter and estimates that 2018 could break a record for most capital invested, exceeding dot-com era levels. Later stage deals made up nearly 23 percent of deals last quarter, the highest since 2011.

Silicon Valley’s Seattle secret: Bay Area investors making record number of deals in region’s startups

“The overarching trend we’re seeing in private markets is ever-growing sources of capital facilitating larger VC rounds, driving investment totals higher across the VC environment,” John Gabbert, founder and CEO of PitchBook, said in a statement. “There is a question of whether greater competition among investors and the general capital availability is a good thing – as investors may run the risk of overlooking company fundamentals and inflating valuations. At the same time, the exit market appears exceptionally healthy so far this year, especially through its support of large exits at or above their last private valuation.”

Another trend that may cause concern for early-stage founders is the decline of seed-stage deals, as noted by the MoneyTree Report from PwC and CB Insights, which reported a 26 percent drop in seed-stage deals from the second quarter.

CB Insights CEO Anand Sanwal said that fewer seed rounds will have an impact on the venture ecosystem.

“Investors have traditionally made more bets at the seed stage, and through the Darwinian process that startups go through, many/most of them die,” Sanwal said. “But some of them mature to Series A, B, etc. with a very small minority becoming big companies. If we have fewer and declining seed stage deals, it means fewer companies available for those bigger later stage deals in the future.”

There are a handful of new Seattle-area firms aiming to fill that seed-stage gap and investing in local startups, including Pioneer Square Labs, Flying Fish Ventures, and Unlock Venture Partners.

Washington-based investment firms reeled in $1.2 billion of their own cash last quarter, up from $305 million last year, but down from the $1.4 billion raised in the second quarter.

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