Madrona Venture Labs (MVL), a Seattle-based “startup studio” formed by venture capital firm Madrona Venture Group, just landed $11.3 million for its third fund as it aims to launch up to a dozen new startups.
MVL plans to use the money to create companies that apply artificial intelligence to real estate, retail, insurance or automation. The goal is to launch 8 to 12 startups over the next few years.
“This fund is all about creating founders in Seattle,” said Shauna Causey, a partner at MVL. “We’re all about Seattle.”
This is the third fund that MVL has started since it opened shop in 2014 and its largest to date. The studio’s total financing now stands at more than $20 million.
But there’s a twist this time: The first two funds were exclusively financed by Madrona Venture Group. This new fund brought in outside money from venture capital firms Alpha Edison and WestRiver Group, as well as angel investors such as Rudy Gadre of Founders’ Co-op, former Zillow CEO Spencer Rascoff and former GoDaddy CEO Blake Irving, among others.
The studio has launched seven companies to date, including interior design startup Spruce Up and Mighty AI, which operates a platform for training computer vision models. Those seven companies are now collectively worth $140 million, according to MVL.
“The idea behind Madrona Venture Labs has been to build a systematic process, bring in experienced founders to operate the lab, and continue this tradition of onboarding founders into Seattle startups,” said Mike Fridgen, managing director at MVL and former co-founder of Decide.com, which was acquired by eBay in 2013.
MVL brings in founders from all over and pairs them with people that are working on high-priority problems. When teams come up with particularly good ideas, they’re put through extensive testing and eventually spun out as companies. The investors at Madrona Venture Group also help to vet ideas and make sure they’re ready both for the market and future investors.
The studio tries to remove many of the hurdles that face early-stage companies, such as recruiting and financing, which can stall a startup’s progress. MVL employees who work on forming these companies frequently peel off to join them once they’re launched.
MVL was created by Greg Gottesman, the former longtime Madrona Venture Group managing director who left to launch Pioneer Square Labs, another startup studio in Seattle. PSL uses a similar model to rapidly test and validate new ideas before recruiting a team to build a new company.
MVL also acts as the home of an accelerator that launched last year in a bid by Madrona Venture Group to lure talent from tech giants. The accelerator recently welcomed its second startup, Vouched, which is using AI to verify people’s identities online.
