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The DL - October 2020 PNW Venture Deals, Kelsey Hightower, The 100X Club, and Netflix Recs

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Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
 
November 2 · Issue #72 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue looks at October 2020’s PNW venture deals, a fantastic profile on Kelsey Hightower, an explainer on the 100x Club, and my latest Netflix recs.

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October 2020 PNW Venture Deals
Here are the PNW startups that announced new fundraising rounds in the month of October. These 27 companies raised more than $400M last month!

Series B and Later Rounds 🚀
  • 98point6 - On-demand, text-based primary care platform - $118M Series E co-led by L Catterton and Activant
  • AbSci - All-in-one protein expression platform - $65M Series E led by Casdin Capital
  • Pulumi - Modern infrastructure as code platform - $37.5M Series B led by NEA
  • Skilljar - Customer training and education platform - $33M Series B led by Insight
  • Possible Finance - Fast and affordable payday loan alternative - $11M Series B led by USV

Series A Rounds 🛫
  • Agility Robotics - Developer of bipedal walking robots - $20M Series A4 led by Playground Global and DCVC
  • Temporal Technologies - Open source microservices orchestration platform - $18.75M Series A led by Sequoia
  • Eclypsium - Cloud-based device security platform - $13M round
  • JAXJOX - All-in-one connected home fitness platform - $10M Series A

Seed Rounds 🌱
  • Tomo - Tech-enabled real estate transactions - $40M Seed led by Ribbit, NFX, and Zigg
  • Fabric - API-first, headless commerce platform - $9.5M Seed led by Redpoint
  • Gather - SaaS platform for funeral home services - $4M Seed
  • Strike Graph - Security audits and certifications software - $3.9M Seed led by Madrona
  • Leadr - People management software for leaders - $3.6M Seed
  • Covalent - API for Ethereum-backed assets and protocols - $3.1M Seed
  • HDT Bio - Immunotherapies for oncology and infectious disease - $3M Seed
  • Picnic - Pizza-making robot system - $3M Seed
  • LMPM - Property management software - $2.5M Seed
  • Shotcall - Marketplace to connect creators and fans - $2.2M Seed led by Initial Capital and New Stack Ventures
  • Scener - Virtual movie theater for hosting watch parties - $2.1M Seed led by SeaChange
  • Enviral Tech - COVID surveillance for long-term care communities - $1.5M Seed led by Rogue Venture Partners
  • Voleo - Investment club apps and software - $1.35M round
  • Boost - Sports analytics engine - $1.3M Seed led by TitletownTech
  • Vimocity - Workplace safety platform - $1.25M Seed
  • Neu - Cleaning services for vacation rentals - $800K Seed led by New Stack
  • LegUp - Enrollment software for childcare facilities - $750K Seed
  • Niricson - Infrastructure inspection and risk management software – C$800K Seed led by Swan Venture Fund

M&A and IPOs 💥
  • Smartsweets - Candy with no added sugars and artificial sweeteners - $360M acquisition by TPG Growth
  • TTR - Sales and use tax answers and tax rates - $337M acquisition by Avalara
  • Chef - Infrastructure, application, and DevSecOps automation - $220M acquisition by Progress

Thoughts and Observations 🧐
  • $40M seed round for Tomo! Very cool for the PNW to take the “largest seed round” ever record. Google tells me the largest ever Series A was $946M, so hopefully that is the next milestone!
  • Smartsheet and Smartsweets. Seems like a winning naming strategy for PNW startups! What’s next - SmartSeat, SmartREIT, or… SmartMeat?
  • It looks like after a long, strange year of ups and downs for startup funding, we are back to a normal pace for deal volume and distribution of seed, A, and later stage rounds

Kelsey Hightower 💥
What a fantastic profile of Kelsey Hightower in Protocol last week. Hightower is a Principal Engineer at Google Cloud, and he was one of the key contributors to Kubernetes. He literally wrote the book on Kubernetes with Brendan Burns and Joe Beda, two of the Kubernetes cofounders.

While Hightower is “a legend inside the world of cloud tech” today, he actually started his career as a DSL installation tech in Atlanta. One memory from that job was a well-known architect and city planner telling Hightower a Black person had never stepped foot inside his house before, but “you’re the only person that can give me this technology right now, so I’m going to put all that aside, because you have something I don’t.”

From that point onwards, Hightower decided that technology was an empowering skill that he wanted to develop, and he went on to get a jobs as a systems administrator, a customer-facing software engineer, an early startup employee, and eventually a Google employee building Kubernetes.

He has had an incredible journey, and the full story is 100x better than this one paragraph summary, so please go read it!

The 100x Club
“You know what’s cooler than a billion dollars?”
A billion dollar valuation at a 100x revenue multiple! 🤩

The Information wrote a great article last week on “The 100x Club,” which is the group of SaaS startups raising money at 100x revenue multiples. They highlight Retool, a low code development tool, which just raised a funding round at a ~$1B valuation on $10M of ARR, as the latest member of this club.

Some of the other interesting data points on valuation:
  • The total valuation of the top 100 private cloud software companies is ~$270B, which equates to roughly ~25x ARR
  • Dropbox’s last private valuation was $10B, their IPO valuation was $9.2B, and they now trade at $7.5B
  • Notion raised at a $2B valuation on $30M of ARR (67x), and Postman raised at a $2B valuation with <$25M of ARR (80x)

The Information attributes sky-high startup valuations to a few factors:
  1. VCs have a lot of cash - VCs raised $60B in 2020 vs. $18.5B in 2010 - and there aren’t enough good investment opportunities
  2. Some investors think “entry valuations are insignificant” if startups are growing quickly
  3. As public company valuations increase, private company valuations increase as well

Other stuff Dan's talking about
🐝 Murder hornets - I can’t believe this is a real photo. It looks like a scene out of a sci-fi movie, but actually it’s just 2020. You know, when scientists dress up in spacesuits and vacuum “Murder Hornets” out of a tree
🎥 Netflix recs - Speaking of movies, Sarah and I are trying to consume as much media as possible before baby arrives, and we have loved The Trial of the Chicago 7 and Queen’s Gambit - 91% and 97% on Rotten Tomatoes!
🎮 “I am literally shocked” - Here’s an awesome holiday gift idea for your favorite gamer. Backbone dropped last week and got some incredible reviews. (Disclaimer: I’m extra hyped up for this release because I’m an investor. LMK if you need some help moving up the waitlist!)
💸 Crypto investors - As the crypto market starts heating up again, check out this profile on Paradigm, a crypto VC that raised $400M and tripled it immediately. Pretty amazing start for a new fund

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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