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The DL - An inside view into Pacific Northwest Tech

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Hey! Welcome to issue #1 of The DL! This is a weekly newsletter about tech, startups, entrepreneurshi
 
June 24 · Issue #1 · View online
The DL
Hey! Welcome to issue #1 of The DL! This is a weekly newsletter about tech, startups, entrepreneurship, and investing in the Pacific Northwest.
I’m writing this to share what I’m seeing as a Seattle-based VC and to connect with other people who are interested in what’s going on in PNW tech. If you have thoughts, questions, comments, hit reply - I’d love to hear from you!👋


Pacific Northwest H1 2019 Venture Deals
I thought it would be good to start issue #1 out with some commentary on the overall startup market in Washington, Oregon, and British Columbia. For the first half of 2019, we are seeing similar deal volume to previous years but higher valuations and better deals for founders.
For example, in Q2 2017, the “median” deal in the PNW was a $3M raise at a $15M post-money valuation, which would be ~20% dilution. Today, the “median” deal is a ~$4M raise at a ~$40M valuation – only 10% dilution.
Better deals for founders are good, but along with higher valuations, investors have higher expectations from companies as well. Here’s a good blog post from Wing on how this trend is playing out between startups and VCs.
Basically, startups today are raising more money, sooner, in multiple “Seed” rounds. By the time they get to the “Series A,” they have “Series B” traction and valuation expectations. At that point, these companies are a safer bet for investors, but they are more expensive than they’ve been in the past.
So who’s out here raising these bigger, better Series A rounds? Here are some of the recently announced Series A deals in the PNW:
  • 👩‍⚕️ Xealth - Marketplace for digital health apps - $14M Series A
  • 🏢 Traction Guest - Visitor management system - $13M Series A led by Bessemer Venture Partners
  • 📈 Bumped - Customer loyalty using stocks and ETFs - $19.5M Series A led by Canaan Partners
  • 🏦 Possible Finance - Affordable short-term installment loans - $10.5M Series A led by Canvas Ventures
  • (Pro-tip: Startups normally try to hire aggressively after raising money, so if any of these sound interesting to you, check out their jobs pages)

Forward this to your friends at Tableau
How great are these mascots?
One of the big pieces of recent Seattle news is Salesforce buying Tableau. It’s their largest acquisition ever, and pretty amazing for the teams that have built Tableau into a $15B+ company (to put that in perspective, Nordstrom’s current enterprise value is ~$10B).
But personally, the main reason I think big acquisitions are exciting is that acquisitions are a great catalyst for teams of people to start thinking about leaving companies and starting new ones.
Acquisitions create a great environment for startup formation because they…
  • typically occur when there are great people, who work well together, building great products
  • bring a lot of new money into a community/region that can be invested into new startups, allowing people to go take risks
  • lead to changes in teams and culture that encourage people to go back to a smaller company environment
  • inspire people to build something big!
Of course, the best example of this was “PayPal Mafia.” After PayPal was acquired by eBay, the original PayPal employees went on to start companies like Tesla, LinkedIn, Palantir, YouTube, Yelp, and Yammer to name a few… Let’s hope we see the same success with Tableau!
TL;DR - Ask your friends at Tableau if they want to start brainstorming about their next startup with you ⚡

Other stuff I've been talking about
📚 Rocket Men - Awesome book. This is one of those 5 full stars on Amazon type books. I didn’t know much about the Apollo space program before reading this, but this was amazing – such a well-written set of stories about the people behind the Apollo missions and how they got to the moon
🍔 Beyond Meat ($BYND) - If you haven’t tried the burgers yet, you should! I didn’t think they were very good. The stock price, on the other hand, is fascinating. This company IPO-ed at $25 and is now trading at $150+. Their revenue forecast for 2019 is $210M and their market cap is ~$8.5B (that’s a 40x+ multiple for a company with 20% gross margins 🤮). For reference, Tyson Foods does ~$40B of annual revenue and is worth ~$40B. If you’re thinking about shorting, though, watch out. Lots of people are thinking the same thing, so the cost to borrow shares to short is 125%+ per year
💰 Facebook Libra - Just so I can end issue #1 on something controversial - I really like this project. It’s a great demonstration of blockchain’s #1 benefit - the ability to pull a group of people/organizations together, that might not otherwise work together under a centralized hierarchy. Who knows if this will work, but I’m excited to see what happens

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