Madrona Venture Group opens Silicon Valley office, while it looks further than Seattle to make new ventures


Seattle’s Madrona Venture Group is doubling up on its recent effort to expand investment outside its home in the Pacific Northwest, opening its first office outside of the Pacific Northwest region, within Silicon Valley.

In 1995, the company was founded. Madrona was a company that has traditionally been concentrated on its home base in Seattle as well as its surroundings in the Pacific Northwest, becoming one of the largest investors in the region of technology companies, such as Apptio, Smartsheet, Impinj and others.

In 2019, the company announced the “acceleration fund” designed for mature businesses throughout North America. The fund raised $100 million that year to fund the fund, and it added an additional $161 million by the final quarter of 2020.

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The decision to open an actual outpost outside Seattle will reflect Madrona’s constant ambition to explore outside its borders for new opportunities and to keep an eye on other tech-related ecosystems.

Similar strategies are employed by Flying Fish, another Seattle company which raised its second fund in the last quarter of this year, and announced it was planning to increase its geographical area of operation.

Madrona will be “first and foremost a Seattle firm,” said S. Soma Somasegar, an ex- Microsoft executive who was promoted to the managing director in. Madrona will keep making large portions of its initial stage investments throughout the Pacific Northwest, which has set records in terms of funding this year..

However, Somasegar added that “we want to get into the best of the best companies.” A flag at Silicon Valley helps fuel that aim.

“We are going to be more open to getting into those companies, no matter where they are,” said the official.

A majority of the portfolio of Madrona’s is made up of companies that are located outside within the Pacific Northwest, and half of the “acceleration fund” has gone towards companies outside of town. Recent investments outside Seattle include fintech firm Sila as well as travel software startup Spotnana as well as the revenue-operations platform Clari. It also supports later-stage businesses like UiPath as well as Snowflake.

“We want to be a world class firm,” Somasegar said. “And whatever that means for us to be world class, we will be doing that.”

The company of 50 employees is now finding itself in a greater battle for deals that are in the early stages throughout Seattle. Seattle region, as new companies like Fuse, Flying Fish, Pioneer Square Labs and others have raised significant sums in recent times.

“I’m really excited about these funds,” Somasegar stated. “Sometimes we’ll play each other, but sometimes we’re going to work together. This allows us to be part of a larger community, which is incredible from any angle you consider it.”

There are also venture capitalists more often looking at the Seattle region to make new ventures.

Somasegar noted that the switch to remote work during the pandemic has helped Madrona become more comfortable with the backing of businesses outside of Seattle.

Madrona also hired its first managing director. This office in Palo Alto, Calif. office, at 524 Hamilton is scheduled to open next month, and will be headed by Karan Mehandru who has just was hired by Madrona as the company’s new managing director.

Mehandru was previously a venture capitalist for NY-based Steadfast Capital and Menlo Park, Calif.-based Trinity Ventures, the backer of giants in the Seattle area, such as Auth0 as well as Outreach. The focus will be upon “early and acceleration stage companies based anywhere in North America, with a focus on SaaS, Future of Work, ML/AI, intelligent applications, developer focused tools and datacenter infrastructure,” Mehandru wrote in a blog entry.

Madrona has in the year 2020 brought $345m to fund it’s eight “core” fund, which is targeted at Pacific Northwest companies. The previous year, it added $120 million to the “Fund VII Extension Fund” from investors who earlier contributed $300 million to its seventh fund that was raised in 2018.

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