2016: Bad + Ugly, but also Good

Two blog posts from friends stuck out for me this week, Brad Feld’s December Depression and Boris Wertz’ A Year in Review: 2016.

Brad’s post was a perfect summary of how I’ve been feeling since the November election, with its unfolding aftermath offering an almost-daily sucker punch to my equilibrium. This gloom has seeped into my work life, making the normal ups and downs of early-stage investing even more emotionally taxing than usual. So Boris’ post came as a welcome breath of fresh air and a reminder to look back on the year as a whole, not just the five weeks since Election Day, when taking stock.

In that same spirit, here’s a brief recap of some of the high points of the past year, spanning my work at both Founders’ Co-op and Techstars.

The year started with a back-to-back session at Techstars Seattle, a necessary consequence of my decision to switch the program from Summer/Fall in 2015 to Winter/Spring in 2016 and beyond. Nine companies joined us here at Startup Hall for an intensive 12-week session of coaching, mentorship and fundraising. Once again we held our Demo Day celebration at MOHAI, a nod to Seattle’s long history of pioneering and entrepreneurship.

Of the nine companies that joined us in February:

  • One (Beam) was immediately acquired by Microsoft to play a critical role in their game-streaming strategy
  • Four (Kepler, Reflect, Polly and Shyft) collectively raised $10M in venture capital from well-regarded firms like DFJ, Madona and Amplify
  • Three (Fig, Droneseed and Keepe) raised strong angel-led rounds of $750K or more
  • One (Validated) was invited to the Jaguar-Land Rover mobility accelerator to continue their development.

The great results for this year’s cohort were even more welcome in the context of the significant 1H16 reset in the venture investment climate, with both deal volume and valuations taking a significant hit from frothy 2015 peaks. That reset also made for a different-than-expected year at Founders’ Co-op, where many planned up-rounds turned into hastily-assembled inside bridge rounds (and a few failed financings), with much more effort going to existing portfolio support than sourcing or closing new deals.

Thankfully, a combination of strong overall performance in the portfolio and a general market stabilization (albeit at lower levels) toward the back half of the year allowed us to close on a remarkable number of follow-on financings in 2016, and to resume our pace of new investments as well. A few notable stats on both fronts:

  • In 2016, 13 Founders’ Co-op portfolio companies (spanning both of our most recent funds) closed over $150 million in follow-on capital, including 8-figure raises at Auth0, LendUp, Outreach and Remitly.
  • We also closed five new investments in the period, including announced raises for Reflect and Komiko, plus three more that haven’t yet been announced.

As the year drew to a close, there was one other project percolating in the background that came to a satisfying – and exciting – conclusion.

In late 2015, Founders’ Co-op co-led a seed investment in KITT.AI alongside Amazon’s new Alexa Fund. That sparked a broader conversation with the Alexa Fund team about how to make Seattle the global epicenter of voice technology and “conversational interfaces”, which in turn led to a discussion with Techstars about the possibility of creating a new accelerator program dedicated to this opportunity. It took us until November to work out all the details, but the program was finally announced to the public two weeks ago at re:invent, Amazon’s massive global developer conference, with applications set to open in just a few weeks. Like Techstars Seattle, the Alexa Accelerator, Powered by Techstars will be based in Startup Hall, extending the partnership we struck with the University of Washington back in 2013 and further cementing the University District as one of Seattle’s most important innovation neighborhoods.

Looking back, it turns out that 2016 wasn’t such a terrible year after all. I’m still in a funk about our national politics and expect to be so for at least the next four years. But I also feel beyond lucky to be able to work on exciting ideas with incredible people in an amazing city every single day. Thank you and happy holidays to my investing partners, our limited partners, all the founders and team members at our portfolio companies, and the many co-investors, co-conspirators and fellow travelers who make my work such a joy, and make the Pacific Northwest such a joyful place in which to do it.

Onward to 2017!