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The DL - An inside view into Pacific Northwest Tech

Hey! Welcome to The DL! This is a weekly newsletter about tech, startups, and investing in the Pacifi
August 5 · Issue #7 · View online
The DL
Hey! Welcome to The DL! This is a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
If you have thoughts, questions, or comments, hit reply - I’d love to hear from you! 👋 Referred by a friend? Sign up here.

How much money do VCs make? 💸
Last week, Version One, an early-stage VC based in Vancouver and SF, published a great blog post on the returns to-date for their first fund, a $15M fund raised in 2012.

The fund invested in 20 companies over two and a half years, and you can see the multiple on invested capital for each portfolio company as a point on the chart above (current asset value divided by total invested capital).

Here are some of the takeaways from their post:
  • Startups are hard. One-third of portfolio companies did not return any capital, and the second third returned <1x the capital invested
  • But in the last third, one company generated a 48x return, and there are another 3 potential “fund makers” that could pay back the entire fund by themselves
  • Because of those fund makers, Version One is confident their fund will end up returning at least 4x on invested capital, as unrealized returns turn into ‘real’ returns over the next few years

A 4x+ return on a fund is awesome. An AngelList analysis showed that writing a check into every AngelList investment would give you a “market return” of ~1.7x (before fees). In reality, however, only one-third of managers are able to outperform the market return because returns are not normally distributed, and averages skew much higher than the median.

If you want to learn more about Version One, they put together super high-quality research on the markets and themes where they invest. Check out their guides to marketplaces, social platforms, and digital healthcare. Oh yeah, and they’re hiring!

Seattle's biotech startups and the Fred Hutch 👩‍🔬
Putting together the Pacific Northwest unicorn chart, I was surprised to learn that ~10% of the PNW unicorns over the last two decades have been biotech companiesJuno Therapeutics (acquired for $9B), Adaptive Biotechnologies ($5B market cap), and Seattle Genetics ($13B market cap.)

Notably, both Juno and Adaptive were spin-outs from the Fred Hutch. Most people in tech world don’t know too much about the Hutch, so here is a very quick primer on some of their most famous work:
Fred Hutch researchers were the pioneers of bone marrow transplants to treat patients with certain cancers, an approach that provided the first proof that the immune system can be harnessed to fight cancer. That led to today’s immunotherapies, which are improving lives and changing the way doctors approach this disease.

If you’ve read anything about immunotherapies or programming white blood cells to attack cancer cells, that’s what Juno does. Adaptive Biotechnologies also focuses on the immune system, but their technology uses DNA sequencing machines to analyze immune cells for early indications of cancer and other diseases.

There are now three dozen spin-outs working to commercialize Hutch research, and it’s exciting to see the intersection of computer, data, and life sciences research happening in Seattle. For example, Microsoft partnered with Adaptive to develop their AI-driven blood test, and UW researchers are using biology to make better computers.

(If you want to learn more about the Hutch’s journey to find a cure for cancer, the Seattle Times wrote a great feature about their history last year.)

Other stuff Xiao's been talking about
☝️ Special guest this week in the DL
☝️ Special guest this week in the DL
Note from Dan: What do you do after consulting at McKinsey, redesigning NYC public schools, working in private equity, and then launching the Amazon Go stores? Go revolutionize the legal industry of course! Turning it over to Xiao here…

Hi everyone! My name is Xiao Wang and I’m the co-founder/CEO of Boundless Immigration, a Series A startup helping immigrants and their families through the complex government process at 1/5 the cost of traditional lawyers. 

Besides maintaining our 100% government approval rate and figuring out how to successfully scale a fast-growing company, I love reading. Business, tech, outdoors, life, policy… my reading list is truly boundless (I’ll show myself out now).

I managed to parlay sharing that fascinating Cosmic Crisp story last week into taking over an entire corner of Dan’s weekly newsletter, so here you are for the first week of August!
  1. One writer’s experiment in drop-shipping sketchy swimsuits from AliExpress. 
  2. What life as a delivery driver is like (with insights into how tipping actually works). Since this article, Doordash has updated its policies to be more driver-friendly, so score one for journalism.
  3. A brief history of money, as we prepare for our Libra overlords.
  4. Unsurprising to anyone who watched the bike-sharing art in China over the past few years, researchers at NC State concluded that scooters aren’t that great for the environment either. Can we solve the urban mobility problem while treating objects nicer?
  5. A little bit of history, a little bit of nostalgia, bivalves of the heart. What Ivar’s means to those who grew up in the Pacific NW. 

Found them fascinating? Complete waste of time? Please email me at if you have any comments or recommendations.

Share the DL and the Hutch gets $9 from Madrona to end cancer!
Text doesn’t make sense, but this gif was so good I had to use it 😬
Text doesn’t make sense, but this gif was so good I had to use it 😬
This weekend, my wife and I are going to be biking in the Fred Hutch Obliteride to raise money for cancer research. Nearly 40% of all people in the US will be diagnosed with cancer, which sadly means most people have a family member who will be diagnosed with cancer at some point.

The Hutch is one of the leading institutions working on cancer prevention, diagnostics, and treatment, and while they have been the academic home to some very successful startups, they still need to raise money to fund their research.

I would love your support helping to raise money for Obliteride, and here’s a link where you can donate.

But wait… there’s more! If you forward this newsletter to a friend, and they subscribe, I’ll donate $1 to the Hutch on your behalf. Then, that $1 will get matched by $7 from the awesome team at Madrona (thank you Hope, Len, Matt, Scott, Soma, Tim, Tom, and Paul!).
So every new subscriber between now and the ride means $9 towards cancer research from The DL community! What a great deal! 😃

Please hit reply!
About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.
I’m writing this to connect with other people who are interested in what’s going on in PNW tech, so if you have thoughts, questions, or comments, hit reply - I’d love to hear from you! 👋

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