What is Seattle best at?

We just announced our Techstars Seattle 2017 cohort — nine companies that represent the best of the Pacific Northwest innovation ecosystem. In both the recruiting effort for the class and in making our final selections, our top-of-mind question is always this one:

“What are the most powerful pairings of founder capabilities and ecosystem resources that will give the teams we select an unfair competitive advantage on the long road to startup success?”

As an innovation ecosystem, Seattle competes globally for talent and capital. With the world’s biggest and best-known innovation market just two hours away by air, we need to be crystal clear about the places we can not only win the occasional competition against a Bay Area challenger, but lean into opportunities where we consistently, systematically outperform that market and earn the attention of the world’s most talented makers and investors.

When we get that right, amazing things happen for entrepreneurs and the investors who back them.

Of the 1,000 companies that have completed a Techstars accelerator program since 2007, 90% have either been acquired or are still in operation. A recent Mattermark analysis found that nearly 5% of all Series A financings in the past few years were earned by Techstars alumni.

Techstars Seattle grads enjoy the same odds-beating success rate: our 71 alumni companies have raised over $350 million in follow-on capital; the nine companies in our 2016 cohort collectively raised over $10 million immediately after completing the program, with four of those rounds led by Bay Area, New York and Seattle-based VC firms.

So what are the vectors of innovation where Seattle can compete and win in the global market for ideas, people and money? When selecting our most recent Techstars Seattle companies, we looked at three core areas, and four emerging areas, to inform our selections:

Enterprise Software-as-a-Service

  • Seattle’s software ecosystem exists because Bill Gates and Paul Allen grew up here and moved their fledgling operating system startup from Albuquerque to their hometown in 1979. Microsoft’s extraordinary success here created a huge pool of tech wealth and a local diaspora of technical and business leaders with experience building global franchises in operating systems, networking, databases, developer tools and business productivity applications. Later regional success stories like Concur, Tableau, Isilon Systems, and F5 Networks all benefited directly or indirectly from the talent pool generated by Microsoft’s long tenure as a global leader in enterprise technology.
  • In this year’s Techstars Seattle cohort, Hazel, Valid8 and VendorHawk tap most deeply into this center of excellence.

Cloud Infrastructure + Developer Productivity

  • Microsoft may have paved the way, but over the past decade Amazon has become the clear global leader in cloud infrastructure via their Amazon Web Services business unit. By offering hardware infrastructure as a pay-as-you-go online service, Amazon has revolutionized the way companies build and scale their technology platforms, slashing the cost and lowering the risk of starting new companies, and increasingly shifting enterprise and government workloads from owned-and-operated data centers to the public cloud. Microsoft is running hard at this opportunity as well via their Azure business unit, and many Bay Area-based tech companies have scaled up cloud engineering offices in the area to take advantage of the depth of experienced cloud talent that now calls Seattle home.
  • Stackery is the Techstars Seattle 2017 most strongly aligned with this center of excellence.

eCommerce + Marketplaces

  • Before revolutionizing the software infrastructure business, Amazon was best known as the leading global disruptor of traditional retailing. The company began by scaling aggressively across categories as a direct merchant, but has increasingly leveraged its distribution and logistics excellence as a marketplace reseller of third-party goods. Combine this outsized impact on global retail with the brand-building and merchandising skills embedded in Seattle-based retailers like Starbucks, Nordstrom, Costco and REI, and Seattle-based digital marketplaces like Expedia, Zillow and Redfin, and you have an unmatched regional talent pool with world-class leadership experience in every core discipline of both traditional and digital selling.
  • Coastline Market and Swym are the Techstars Seattle 2017 companies tapping most deeply into this sector.

Biopharma + Wellness

  • Boston and San Diego both have long track records as leaders in these categories, but some of the  Pacific Northwest’s biggest recent venture financings — including Fred Hutchinson Cancer Research Center spinouts Juno Therapeutics’ $145 million Series A in 2014, and Nohla Therapeutics’ $43.5 million raise last December — have raised awareness of the depth and quality of Seattle-area biotech. These recent wins are backed up by a long history of multidisciplinary research and commercial innovation, anchored by the University of Washington and supporting institutions like the Washington Reasearch Foundation. The most exciting recent work in this category combines our region’s deep expertise in medicine with our global leadership in technology to create truly groundbreaking innovations in fields like global health and predictive medicine.
  • Silene Biotech and CuePath are the two Techstars Seattle 2017 companies working in this domain.

Energy Transmission + Trading

Space + Aerospace

  • Like Microsoft in software, The Boeing Company is a long-time anchor tenant in our regional technology ecosystem, delivering aerospace solutions for both commercial and defense related missions since 1910. Despite a headquarters move to Chicago in 2001, the company’s long (and continued) presence here has spawned a vast ecosystem of talent and companies spanning the entire aerospace supply chain. That talent density has led Seattle to become a leading home for “Space 2.0” companies, including Jeff Bezos-funded Blue Origin, Paul Allen-funded companies BlackSky Global and Vulcan Aerospace, asteroid mining company Planetary Resources, and many more.
  • Techstars welcomed its first space investment (Kepler Communications) in Seattle’s 2016 cohort; we didn’t source a company in this category in our 2017 group but are actively looking for referrals in this domain for 2018.

The “AI Stack” (ML / AI / NLU)

  • This is our newest category, but one that’s already driving global leadership by both scaled companies and startups in the region. As with most “new” innovation categories, the foundations of our regional ecosystem were laid years ago by researchers at technical hubs like the University of Washington, Microsoft, Amazon and the Allen Institute for Artificial Intelligence. The opportunity rocketed to the headlines in 2016 because of Amazon’s explosive sales success with their Echo and Dot products – the first voice-only computing devices to reach mainstream adoption. With massive hiring pushes now underway at Amazon (for Alexa), Microsoft (supporting Cortana) and others, Seattle has become a gravity well for the world’s best technical talent in the intertwined technologies of Machine Learning (ML), Artificial Intelligence (AI) and Natural Language Understanding (NLU).
  • Our big bet in this category is a new partnership with Amazon’s Alexa Fund to create the Alexa Accelerator, Powered by Techstars. Applications are open now and the program will run in Startup Hall (the same UW facility that houses Techstars Seattle) in July 2017.

As entrepreneurs and investors in the Pacific Northwest we are incredibly grateful to the many founders and leaders over the past decades who have made our region a global center of excellence on so many critical vectors of technology innovation. Techstars Seattle is honored to play a supporting role in this long tradition, and we’re excited to introduce our 2017 cohort to all of you who have made our work possible. Onward!