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The DL - An inside view into Pacific Northwest Tech

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Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
 
February 10 · Issue #34 · 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 a summary of January’s PNW venture deals, a look back at what haters were saying about Amazon as they reach a $1T market cap, and a step-by-step DIY valuation model for Tesla.

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January 2020 PNW Venture Deals
Here are the PNW startups that announced new fundraising rounds in the month of November. These 23 companies raised ~$180M last month!

Series B and Later Rounds 🚀
  • Porch - Home improvement platform designed to connect homeowners with home repair and maintenance providers - $20.6M Series C
  • Ventec Life Systems - Multi-function respiratory system combining ventilation, oxygen, cough, suction, and nebulization - $20M Series E
  • OceanGate - Manned submersibles for commercial projects, scientific research, and exploration travel - $18M round
  • AbSci - rapid and low-cost biomanufacturing for complex biotherapeutics - $10.4M Series D led by KBI Biopharma
  • Polyverse - Cyber security company that randomizes Linux binaries to deploy moving target defense strategies - $8M round

Series A Rounds 🛫
  • Aspect Biosystems - Microfluidics and 3D bioprinting to create living, human tissue - $20M Series A led by Radical Ventures
  • Twistle - Software to help health systems automate personalized education and care communications with their patients - $18M Series A
  • TwinStrand Biosciences - Next-gen DNA sequencing with 10,000-fold higher accuracy - $16M Series A led by Madrona
  • Powell Software - Collaboration, productivity and governance products for Office 365 - $16M Series A led by Level Equity and CapHorn Invest
  • Joy - Wedding planning platform with websites, guest lists, invites, registries, and mobile apps - $9M Series A

Seed Rounds 🌱
  • Uplevel - Employee effectiveness platform to empower engineering team managers - $7.5M Seed from Norwest, Madrona, and Voyager
  • Alitheon - AI authentication that can distinguish any solid object from visually identical items using computer vision - $3.3M Seed
  • Tectonic Audio Labs - Flat panel audio systems for automotive and professional customers - $1.8M round
  • Cloud Campaign - Digital platform designed to help marketing agencies scale social media management - $1.7M Seed led by Right Side Capital
  • Printforia - Real-time manufacturing and fulfillment for customized apparel - $1.4M Seed
  • Q5id - Multifactor biometric enrollment and authentication platform - $1.4M Seed
  • Nori - Blockchain-based marketplace for carbon removal - $1.3M Seed
  • Riff Cold Brewed - Producer of cold-brewed coffee - $1.2M Seed
  • Carbitex - Manufacturer of carbon fiber fabrics - $1M Seed
  • Soovu Labs - Wearable device designed to treat lower back and menstrual pain - $800K Seed
  • React Mobile - Panic button app and safety platform for the hospitality industry - $750K Seed
  • Traxitt - Software to turn IoT sensor data into actionable insights - CAD800K Seed led by 7 Gate Ventures
  • StormSensor - Stormwater monitoring platform to prevent flooding and sewage overflows - $600K Seed led by American Family Institute

Some observations on this list:
  • The last two months have been slower for fundraising, but expect things to pick back up in February
  • There were fewer SaaS companies raising large rounds last month, but what a cool variety of other types of startups…
  • For example, you can sign up to try the OceanGate submarines on their weekly dives in Possession Sound and see 3D-printed “human tissues on demand” on the Aspect Biosystems YouTube

Amazon reaches $1T market cap!
Amazon has officially joined Apple ($1.4T), Microsoft ($1.4T), and Alphabet ($1.0T) in the cuatro commas club! To celebrate, here are a few great quotes from haters including Barron’s 1999 Amazon.bomb article:
Despite all the hoopla surrounding Amazon, Bezos has not really revolutionized the book industry at all. In essence, he is a middleman, and he will likely be outflanked by companies that sell their wares directly to consumers.
“Once Wal-Mart decides to go after Amazon, there’s no contest. Wal-Mart has resources Amazon can’t even dream about.”
It’s hard to say when it will dawn on the masses that Amazon’s growth is slowing markedly. In 1997, the company’s revenues grew 825%… This year that growth is expected to skid to 128%, and next year it will topple to 58%. Within a few years, this company could be increasing revenues at an annual rate of 10% or so.

and a 1999 Forrester Research write-up about Amazon.toast :
Amazon supposedly will dominate because of five factors: 1) Its brand is well-known; 2) it is gathering the best customer information; 3) its access to capital is endless; 4) it has the best technology; and 5) its syndication tactic. Here’s why this thinking is wrong:
1) On-line brands are fleeting. Forrester’s survey of 100,000 Americans has shown that loyalty in the on-line world does not match loyalty in the physical world.
2) Customer information will be ubiquitous. In the future, information on consumers will be detailed and widely available. No single company will have a monopoly on customer behavior or attitudes.

I love reading these reports because the authors were both really right and really wrong. For example, Amazon is definitely a “middleman,” but it turns out that’s a very good place to be for an internet-scale marketplace.

I also found it interesting that both reports called out the direct to consumer selling motion as one of the key things that would take down Amazon. That clearly hasn’t happened yet, but with the rise of Shopify and a DTC company for everything, we’ll see what happens over the next 20 years.

Other stuff Dan's talking about
If you were holding TSLA last week, congratulations! The DL needs sponsors, so hit me up! 😉
If you were holding TSLA last week, congratulations! The DL needs sponsors, so hit me up! 😉
🚗 DIY Tesla model - In case you want to figure out what Tesla is worth, an NYU finance professor wrote a fantastic blog post that guides you through a step-by-step valuation for Tesla based on your belief in the various pieces of their story. Great example of tying a story to the numbers
💑 Amazon Dating - Lol. This site is awesome 🤣
😎 Millennial startup life - MSCHF is every millennial/Gen Z’s dream company. Make money working on cool new projects every two weeks. Check out their past “drops” here
👩‍🏫 Front Series C deck - I love when startups publish their pitch decks - especially when they raise $60M from the founders of Atlassian, Okta, Qualtrics, and Zoom. Here is Front’s Series C deck, along with links to their Series B and Series A decks, so you can see their progress

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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