Branching out: Madrona Venture Group raises $100M to lead 'acceleration stage' investments

by Quinten Dol
May 1, 2019
madrona venture group raises $100 million acceleration fund
photo via madrona venture group

With early investments in companies like Smartsheet, Apptio, Redfin and Amazon under its belt, you could say that Madrona Venture Group has mastered the ability to pick winners at the Seed and Series A stages.

Now, after almost a quarter of a century in business, the firm is reaching further downstream along the startup journey. In a post on its website, the group’s managing directors — Tom Alberg, Matt McIlwain, Hope Cochran, Paul Goodrich, S. Somasegar, Scott Jacobson, Len Jordan and Tim Porter — announced the Madrona Acceleration Fund, worth $100 million, to make first investments in startups at the Series B and C stages.

“For us, acceleration stage means the company has strong evidence of product-market fit, has demonstrated customer value and product differentiation, and has complimented exceptional founders with key executives to help build and sell those products,” the directors wrote. “With this new fund, we will lead rounds or partner with other investors on a few select acceleration stage companies each year.”

Madrona’s Seed and Series A investments traditionally focus on startups headquartered in the Pacific Northwest, but the firm will consider companies from around the country for its Acceleration Fund.

Madrona invested in Smartsheet in the Series A and then two years later during the depth of the recession with a product revamp in front of us, they invested further.”

 

So why the expansion? In the post, the managing directors outlined a number of reasons to feel optimistic about dipping their toes into the so-called “acceleration stage.” These include the firm’s 24 years of experience; Seattle’s status as a global hub for machine learning, big data and cloud computing; and, of course, the presence of Microsoft and Amazon. Madrona trumpeted its deep ties with Microsoft in the post, while co-founder Tom Alberg only recently stepped down from Amazon’s board of directors, having participated in its Series A funding round back in 1995. Alberg was Amazon’s second longest-serving board member — after big bad Bezos himself.

A certain amount of FOMO also seems to have contributed to Madrona’s official push beyond early-stage investments.

“We have also missed out on investing in some high potential Seattle-area acceleration stage companies,” the directors wrote, calling out iCertis, Outreach, Auth0 and Textio by name.

Prominent entrepreneurs from around Seattle and beyond lined up to share their excitement over Madrona’s announcement.

They have lived up to my expectations — helping with customer acquisition, critical hires, key partnerships and invaluable counsel.”

 

“Madrona invested in Smartsheet in the Series A and then two years later during the depth of the recession with a product revamp in front of us, they invested further,” Smartsheet CEO Mark Mader said in a statement. “Madrona delivered value across hiring, partnering, go-to-market strategy, capital raising and more.”

Rajeev Singh worked with Madrona Venture Group as part of Apptio and Amperity’s boards of directors and when he took the helm of Accolade in 2015, he tapped the firm for help.

“They have lived up to my expectations — helping with customer acquisition, critical hires, key partnerships and invaluable counsel,” he said.

Daniel Dines, CEO of New York-based robotic process automation giant UiPath, also offered his experience with Madrona.

“When we first started talking about building a research and development center in the Seattle area, I immediately knew we needed a local partner with experience building products, teams and go-to-market strategies,” Dines said. “We found that in Madrona. The team has helped us accelerate some key product strategy objectives, recruit important team members to help scale the team and also connect with local technology and business leaders at Microsoft.”

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