Seattle’s startup attorneys and bankers have lengthy helped founders increase capital. Now they’re pooling a few of their very own cash to spend money on promising early stage tech corporations throughout the Pacific Northwest.
A trio of longtime Seattle startup service suppliers — Minh Le of Stifel Financial institution and Craig Sherman and David Wickwire of Wilson Sonsini — are teaming as much as lead the Pacific Northwest fund for Service Supplier Capital (SPC), a nationwide agency that invests area by area.
SPC launched in 2014 out of Colorado with a singular startup investing mannequin. It co-invests in early stage rounds led by institutional enterprise companies, sometimes writing smaller checks into those self same offers.
The traders — restricted companions, or LPs — come from legislation, banking, accounting, and insurance coverage communities, reflecting an effort to let the professionals who help startups additionally spend money on them. Angel traders and serial entrepreneurs are additionally a part of the combo, utilizing SPC as a option to again extra native founders.
“It’s people that help the ecosystem however oftentimes don’t have entry to the asset class,” Le stated.
The mannequin goals to “index” a area’s early-stage exercise, backing dozens of corporations reasonably than betting on a couple of. SPC has expanded its mannequin from Boulder into different areas akin to New England, Texas, and Chicago. It has raised 11 funds throughout six areas, investing in about 60 corporations per fund.
SPC started exploring a Pacific Northwest fund a few yr and a half in the past. Jody Shepherd, co-founder of SPC, stated the area felt like a “excellent match” given its robust enterprise neighborhood and deep expertise pool round tech giants akin to Amazon and Microsoft.
“As soon as we discovered a crew like Minh, David, and Craig to steer the fund, plus an excellent crew of well-connected LPs, an SPC Pacific Northwest fund was a no brainer,” he informed GeekWire.
Le, Sherman, and Wickwire are mainstays of the Seattle tech ecosystem. Le, a former Silicon Valley Financial institution chief, joined Stifel Financial institution in 2023. Sherman and Wickwire have a mixed 4 many years of expertise at Wilson Sonsini, representing most of the area’s prime venture-backed startups.
Not like conventional funds, the native managing administrators preserve their day jobs. They assist floor offers by way of their networks, whereas Service Supplier Capital makes last funding selections.
The aim isn’t to generate new enterprise for his or her companies, they stated, however to strengthen the broader ecosystem by increasing entry to early capital. The fund’s LP base contains lots of their skilled friends and rivals, from different legislation companies and banks throughout the area.
The fund’s mannequin is deliberately broad and formulaic. Diligence is minimal; assembly the factors (early stage tech or life sciences startup within the Pacific Northwest elevating its first spherical from an institutional investor) is usually sufficient.
As a result of the fund depends on trusted institutional leads, founders don’t must pitch SPC instantly — in the event that they meet the factors, the fund can be a part of a spherical shortly.
The brand new Pacific Northwest fund has raised $3 million and has already made two undisclosed investments. It writes checks within the $50,000 to $100,000 vary.
The fund additionally goals to fill a niche left by longtime angels who’ve retired or joined enterprise companies, serving as a sort of “strategic angel” to assist full early rounds, Wickwire stated.
The Seattle startup ecosystem has lengthy been critiqued for missing native capital to spend money on up-and-coming corporations. The closure of Techstars Seattle final yr created one other hole in early stage funding and mentorship.
“There are nice entrepreneurs right here, there are nice engineers right here — and the extra capital there may be supporting the native market, the higher off we’ll all be,” Sherman stated.
