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The DL - March 2020 PNW VC Deals, COVID-19's Impact on Seed Investing, and When We Will Recover

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April 6 · Issue #42 · 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 March’s PNW venture deals, COVID-19’s impact on seed investing, some Madrona shoutouts, and when VCs and founders think the US will recover from coronavirus crisis.

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March 2020 PNW Venture Deals
Here are the PNW startups that announced new fundraising rounds in the month of March. These 20 companies raised $200M+ last month!

Series B and Later Rounds 🚀
  • Silverback Therapeutics - Therapies designed to potently modulate fundamental disease pathways - $78.5M Series B led by US VP
  • Conversa Health - Conversation platform for patient relationship management - $15M Series B led by Northwell and Builders VC
  • ZincFive - Nickel-zinc based energy storage and delivery systems - $13.1M Series C led by 40 North Ventures
  • Textio - Augmented writing platform designed to help companies write better job listings - $12M round
  • OtoNexus - Ultrasound devices for accurate assessment of ear infection - $9.8M Series C led by Keiretsu Forum
  • Bright.md - Virtual-care platform designed to modernize direct-to-patient telehealth - $8.1M Series C co-led by Seven Peaks and B Capital

Series A Rounds 🛫
  • Fantuan Delivery - Restaurant ordering and delivery mobile app - $12M Series A led by Vision Plus Capital
  • Ride Report - Micromobility management tools for cities - $10M Series A led by Unusual Ventures
  • Checkfront - Online booking system for tours and activities - $9.3M CAD Series A led by Framework Venture Partners
  • CoreStack – Continuous and autonomous cloud governance platform - $8.5M Series A led by Naya Ventures
  • Banzai - Event marketing automation platform - $7M Series A led by DNX Ventures
  • Membrion - Membranes for electrodialysis reversal desalination market - $6M Series A led by Bellingham Angel Investors
  • Recompose - Services intended to convert human remains into the soil - $4.7M Series A2 led by ImpactAssets

Seed Rounds 🌱
  • Certn – Near real-time global background checks - $4.5M Seed led by Tribe Capital
  • Reserved.ai - Automation and optimization platform for AWS spend - $3.3M Seed led by Amplify and Pioneer Square Labs
  • Imperative - Platform designed to connect and support employees as peer coaches - $3.3M round
  • Soileos - Bio fertilizers intended to increase crop yield - $2.9M round led by Seattle Angel Conference
  • Goumi - Online retail platform for organic baby clothing - $1M Seed led by Kevin O'Leary
  • Stably - Reserve-backed stable coin designed to work across multiple blockchains - $750K Series A3
  • Sunspear Games - Real-time strategy game developer - $650K Seed

M&A and IPOs 💥
  • OfferUp - Online shopping platform designed to offer a simple way to buy and sell locally - $120M deal led by OLX to acquire letgo
  • NurseGrid - Staffing, communication and schedule management tools for healthcare facilities - $25M acquisition by Healthstream

Thoughts and Observations 🧐
  • Interesting that two-thirds of the Series B and later deals were in the healthcare or life sciences sectors. Coincidence?
  • Good number of Series A! But fewer seed deals than normal (see article below)
  • OfferUp purchasing letgo is interesting because OLX (which invested $120M to finance the acquisition) was already a majority investor in letgo, and the founder of letgo was previously the founder of OLX. Will be fun to read about this one in a future investor update

COVID-19's Impact on Seed Investing
The chart above shows the number of seed deals per month for the last decade. In 2020, seed rounds have plummeted to levels we haven’t seen since 2013. For the last three years, there have been 2,000 to 2,500 seed deals by the end of March, but this year there have only been 1,200.

Interestingly, there is typically a spike in deals every January, and this year we did not see that spike, perhaps indicating a slowdown in the Chinese startup market and/or VCs paying early attention to the spread of COVID-19 before it had reached Europe and North America.

Taking a closer look at a cohort view of the number of deals, right now it looks like we are on track to have a year like 2014, when VCs invested in 2,400 seed deals. Compared to 2019, that would be a ~50% year over year decline.

Of course, even with a significant decline in deal volume, VCs are still looking for new investments (and bragging about it), and startups are still getting started. As Paul Graham recently tweeted
“Any startup that gets started during the next few months is disproportionately likely to succeed. Success depends most of all on determination, and imagine how determined you have to be to start a startup in the middle of a global pandemic.”

Madrona shoutouts
Here are some awesome projects the Madrona team has helped launch over the last few weeks to help our local community, business leaders, and researchers combat COVID-19:
  1. #AllInSeattle - Community effort to raise private donations that will go directly to non-profits already on the ground supporting people, SMALL businesses, and institutions
  2. Silver Lining - Site to help candidates who have recently been laid off connect with companies who are still hiring. 1,000+ candidates and 450+ companies that are hiring signed up already
  3. How We Feel - Mobile app to self report symptoms, see people reporting symptoms near you, and help scientists track the virus. For every install, the HWF team will donate a meal to people in need

Other stuff Dan's talking about
📊 COVID data: What people want (DIY haircuts), VC and founder sentiment (founders more optimistic), every company with a hiring freeze (4K+ companies tracked), Google data on mobility by country/state
🕵️ Spies working from home - Turns out spies still have to take meetings in person, and it’s hard to avoid attracting attention when you’re walking around a city on lockdown
😍 GIF range of celebs - Fantastic resource while working from home. Here’s an Elmo GIF for every emotion, along with a bunch of every celebrities. Based on data from Google’s GIF keyboard
🎤 One Day More! - Fantastic quarantine activity… for families who can sing. Check out this awesome lockdown-themed version of One Day More

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! If you’re new, check out some of the DL’s top articles from the last few months:

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