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The DL - An inside view into Pacific Northwest Tech

Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
November 11 · Issue #21 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue has an analysis of Madrona’s seed investment strategy over the last two years, a guide to investing in championship-winning sports teams, and an explainer on how VC funds make money.

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What seed-stage companies is Madrona investing in?
Last week, The Information wrote an article on the top seed investors over the past decade, and Madrona was one of the ten firms on the list, along with other seed investors like Founder Collective, Accel, First Round, and Sequoia.

Madrona made the list because of “a strong track record of investments reaching IPO” with seed investments in companies like Smartsheet, Redfin, Apptio, and Impinj. Matt McIlwain wrote a blog post on the “Day One to IPO” experience with these companies last year, and it’s a great illustration of how we evaluate and and partner with startups.

So what does the next generation of Madrona’s startups look like? Here’s a look at the seed investments Madrona has made over the last two years to give you a sense of what we think is “next” and how they line up against our investment themes.

☁️ Cloud Native Infrastructure
For the past several years, the primary theme we have been investing against in infrastructure is the developer and the enterprise move to the cloud, and specifically the adoption of cloud native technologies.
  • Pulumi - open source infrastructure as code SDK
  • IOPipe - platform for serverless monitoring and observability

🧠 Intelligent Applications with ML & AI
In the years ahead, “every application is intelligent” will likely be the single biggest investment theme, as machine learning continues to be applied to new and existing data sets, business processes, and vertical markets.  
  • OctoML - end-to-end stack for optimizing and deploying ML models
  • A-Alpha Bio - synthetic biology platform for drug development
  • Lexion - intelligent contract management platform
  • Spruce Up - personalized shopping experience for home furnishings
  • Wicket Labs - audience analytics for OTT video providers

🎤 Next Generation User Interfaces
Just as the mouse and touch screen ushered in new apps for computing and mobility, new modes of computer interaction like voice and gestures are catalyzing compelling new applications for consumers and businesses.
  • Pulse Labs - testing platform for UX feedback on voice apps

🏠 Digital-Physical Customer Experiences
The first 20 years of the internet age were focused on moving experiences from the physical world to the digital world. The next 20 years will be focused on leveraging technology from the digital world to improve our experiences in the physical world.
  • Domicile - end-to-end hospitality provider for businesses
  • Player Tokens - blockchain-based officially licensed, digital collectibles
  • Unearth - cloud-based GIS mapping software for data workflows
  • The Riveter - modern union of working women and allies
  • Tally - platform for free-to-play, real-time prediction experiences

PS - hit reply if you liked this! I’m thinking about putting together a similar analysis of other VCs that are focused on investing in the PNW as well

The future of the DL
OpenAI released their GPT-2 language-generation model last week (originally they said it was “too dangerous” to share). Check out the New Yorker article (definitely read the last two paragraphs) about the technology, and then try it out here - it’s cool.

Go Sounders! ⚽⚽⚽ - ⚽
from @SoundersFC
from @SoundersFC
In case you want to know what it’s like to invest in a championship-winning sports team, check out this Q&A with Terry Myerson (a DL exclusive! 😊) on how he got people like Satya Nadella and Russel Wilson to join the new Sounders investment group.

Looks like that investment is going very well! Congrats to the team and fans!

Other stuff Dan's talking about
📉 “WeWork problem” - VC Twitter has been dunking on the Softbank earnings deck, so no additional comment from me, but here’s a link to the actual slide deck so you can take a look for yourself
🛫 Why don’t rich people just stop working? - Rich people work longer hours and spend less time socializing. The New York Times digs into why
📺 How would a six year old spend $1000? - I loved this YouTube video - definitely worth nine minutes to watch a kid live out his dreams for a day!
👨‍💼 How VCs make money - This is the best article I’ve ever read on how VC firms are structured, charge fees, and create budgets

Please hit reply! (Or subscribe or forward!)
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.

If you have thoughts, questions, or comments, hit reply!

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