It may not be as moving and important as Dr. King’s, but I also have a dream…
I’ve been investing other people’s money (alongside my own) in early-stage software companies for almost three years now — not very long in career terms, but long enough for it to have more or less become my professional identity. But when someone asks me what I do for a living, I still have a hard time thinking of myself as just an investor.
I absolutely love discovering brilliant founding teams and working with them in our growing family of portfolio companies. But my life’s work is more than scouting for talent and making bets. My dream is to play a part – however small – in making Seattle one of the top cities in the world for software entrepreneurs. In that context, Founders Co-op, TechStars Seattle and RevenueLoan are just bricks in the cathedral wall.
It didn’t start out this way. Andy and I just wanted to keep working together as partners after we wrapped up Judy’s Book. We started by helping to create a handful of new companies as co-founders, investors and advisors. We were having so much fun we decided to raise a small fund – Founders Co-op I – from a great group of Seattle-area angels to do more of the same.
But a funny thing happened on the way to investing that first fund. Every time we made a new investment or welcomed a new investor into the fund, we added new members to our extended entrepreneur family. As this family grew, our potential for impact on the local ecosystem grew with it — not in a linear fashion, but geometrically, as each new relationship brought its own rich ecosystem of entrepreneurs and investors with it.
Over the past few years we realized that — if we kept at it — we might have a shot a making a real dent in the startup community here in the Pacific Northwest.
Part of the reason has to do with some wrenching structural changes now underway in the venture capital business. Thanks to open-source development tools and cloud-based infrastructure the cost of starting a software business has fallen precipitously over the past decade. For a combination of reasons – some structural and some human – the traditional venture capital business has had a hard time following entrepreneurs down the cost curve. This has created a growing gap between the needs of tech entrepreneurs and their traditional sources of capital.
In larger and more mature markets – the Bay Area, New York, Boston – new investor entities (especially a new class of “super angel” funds) have emerged to fill this gap. But Seattle’s tech wealth hasn’t been around as long, and was mostly created via enterprise roles at one of our two tech behemoths – Microsoft and Amazon – versus the more diverse and entrepreneurial angel communities that have developed elsewhere. As a result, we don’t (yet) have a rich investor ecosystem dedicated to supporting early-stage software entrepreneurs. Unless you know where to look, the on-ramps to capital and mentorship for Pacific Northwest entrepreneurs can be pretty hard to find.
In addition to being relatively underserved by seed-stage investors, the local entrepreneur community is also more fragmented and “underground” than elsewhere. In San Francisco it’s easy to get the impression that everyone works at a startup. Entrepreneurs are the heroes and and enterprise workers are just biding their time until they find the right startup idea to make the leap. In Seattle, the big tech players seem to dominate the field while startups operate at the margins of the economy.
There is an incredibly rich and vibrant entrepreneurial community here in the Pacific Northwest, but like so much of the local culture it operates privately, via tribal affiliations that are largely invisible to the casual observer. Bit by bit, many of the players in this private system – the big venture firms, NWEN, Startup Weekend, UW CIE, The Alliance of Angels, STS, Seattle 2.0 and others – are finding ways to work together to collectively shine a light on this critical sector of the local economy. Together, these groups are laying the foundation of a more accessible and effective local culture of entrepreneurship.
Late last year I joined the board of the Washington Technology Industry Association to help represent the needs of the startup community among their grown-up cousins, and to learn more about how established tech, academic and government groups are thinking about the role of entrepreneurs in the local economy. I quickly discovered that WTIA colleagues like Matt McIlwain (Madrona), Bill McAleer (Voyager) and Sam Rosenbalm (Microsoft Emerging Business Team) are equally passionate about the issue and bringing their best efforts to the fight.
Seattle isn’t the Bay Area and that’s a source of strength. We have unique assets — both cultural and institutional — that can serve as a platform for a self-sustaining entrepreneurial ecosystem. There are also good models for entrepreneurial community development — with major inspiration coming from Brad Feld’s thought leadership on the issue based on his experiences in Boulder.
If we really want to make Seattle and the Pacific Northwest a global hub for software entrepreneurship, it won’t be short or easy path. As Brad says:
“…[G]et ready for a 20-year journey. Most entrepreneurial communities ramp up over a three- to five-year period and then stall or collapse, with the early leaders getting bored, moving away, getting rich and changing their priorities, or just disengaging. It takes a core group of leaders — at least half a dozen — to commit to provide leadership over at least 20 years.”
So much to do, but it feels like the ball is starting to roll downhill…