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Huge funds. New unicorns. More tech talent. Acquisitions. IPO.
The Seattle startup scene is booming.
PitchBook and NVCA released the latest issues of their Q2 Venture Monitor. Startups in the Seattle area raised a record $ 3.1 billion from 205 deals in the first half of 2021. That’s a $ 1.8 billion increase from 162 deals over the same period last year.
It’s not just Seattle. Other startup centers such as the Bay Area ($ 54.1 billion) and New York City ($ 22.4 billion) are also setting massive funding marks in a different stadium than Seattle.
But by its own standards, the Seattle startup scene has never been stronger.
The larger region is also growing. Tech companies in the Pacific Northwest have raised more than $ 5 billion this year, according to the GeekWire fund tracker. That is more than double than in the previous year period.
Nationwide, venture capital settlement activity has already hit $ 150 billion and will crush last year’s record of $ 156.2 billion, according to Venture Monitor. IPO dollar volume By 2021 it has also surpassed last year’s record totals, and the same goes for mergers and acquisitions.
A large chunk of recent venture capital funding comes from so-called mega-rounds that have created several new unicorns, or privately owned tech startups valued at more than $ 1 billion. Fast-growing companies in the Seattle area, including Highspot, Zenoti, Outreach, Rec Room, and Amperity, have raised venture capital rounds of $ 100 million or more in the past six months.
The Seattle region now has at least 12 “unicorns”; Just five years ago, when GeekWire analyzed CB Insights’ list of unicorns, no Seattle-based startup made the cut.
Seattle lost a unicorn this year. But that was because Okta bought security startup Auth0 for a whopping $ 6.5 billion, one of the largest acquisitions in Seattle tech history and a reflection of the maturity of the ecosystem.
Pandemic accelerated adoption of digital technology, which helped generate revenue for the region’s group of business-to-business enterprise technology companies. Seattle is also experiencing a recent surge in life science startup activity.
Three Seattle-area companies: Sana Biotechnology, Impel Neuropharma, and Paymentus – have gone public with a traditional initial public offering this year, and Icosovax just submitted its application last week. Last month, Seattle-based Nautilus Biotechnology, led by Isilon Systems co-founder Sujal Patel, went public through a SPAC merger. Pet-sitting startup Rover is also preparing to go public through SPAC, while mobile remittance company Remitly recently filed initial IPO documentation.
The market is “very sparkling right now,” he said. Greg gottesman, managing director of Seattle’s Pioneer Square Labs.
“With the Fed pumping trillions of dollars into the economy, it is not surprising that this additional liquidity has reached the private market,” he told GeekWire. “That said, if you think the pandemic has brought massive change and disruption, I can’t imagine a better place to bet right now than new technologies trying to take advantage of these changes for both consumers and businesses.”
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The new funding is helping Seattle startups increase hiring, setting the stage for even greater growth.
Data of Adam Schoenfeld‘s Seattle Startup Hiring Tracker shows 8,518 open positions in 393 new companies, which represents an increase from the 2,968 open positions in the prior year quarter. The companies hired 4,562 additional employees in the second quarter of this year, increasing the overall headcount by 6.4% compared to the first quarter.
And the pool of talent available for hire continues to expand.
The Seattle region added more than 48,000 tech jobs from 2016 to 2020, an increase of more than 35%, growing at a faster rate than any other large US tech market, according to new analysis by real estate firm CBRE. .
Much of that tech job growth is driven by local tech giants Microsoft and Amazon, which both surged during the pandemic. Microsoft has nearly 3,000 job openings in the region and Amazon has more than 13,000. There’s also the expansion of Silicon Valley engineering outposts in the Seattle area, with Facebook, Google and others continuing to expand their footprints.
Having those giants close by can help boost available talent, but also make it harder for startups to offer competitive salaries. And some theorize that big tech companies – not just Amazon and Microsoft, but Expedia, T-Mobile, Zillow Group, Zulily, F5 Networks and others – hamper Seattle’s startup scene, sucking up potential entrepreneurial talent.
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But Heather redman, a managing partner at Flying Fish in Seattle, said she’s seeing more and more people leaving Amazon, in particular, to start businesses. Some recent examples include Shipium, Dendron, Freightweb, Pandion, and others.
There’s also a company like Convoy, a Seattle digital charging startup launched by two former Amazonians in 2015 that was valued at nearly $ 3 billion in 2019 and continues to grow. Now there are former employees of the convoy who are starting their own companies, as candidate and common room.
It’s another example of Seattle’s evolution as a startup city, which last year was in the top 10 of Startup Genome Global Startup Ecosystem Annual Ranking.
New start-ups now also have access to more local funding and guidance, with early-stage companies like Flying Fish, Pioneer Square Labs and Fuse springing up over the last decade, providing local capital for businesses just starting to take off.
There are even programs like Venture Out specifically designed to help people get out of big tech companies and launch startups.
Meanwhile, long-standing firms in the Seattle area, including Madrona Venture Group, Voyager Capital, and Founders’ Co-op, have raised funds in recent years. The angel investor community in the region is also growing, Madrona found in a recent survey.
There seems to be even more growth ahead for the Seattle startup scene. “We expect it to continue to break fundraising and hiring records as the year progresses,” Redman said.
However, he added that if the city doesn’t address issues like housing affordability, “we risk losing this momentum in a few years.”
Tech hubs like Seattle have become centers of opportunity for some while squeezing others. More tech money flowing to the region could mean an expanded tax base, but it could also exacerbate the housing density dilemma.
For now, however, “this region remains a great place to live and work in relation to alternatives,” Redman said.