Madrona taps Amazon, Microsoft alumni for new $300 mln venture fund

Thu Jun 4, 2015 7:30am EDT
 
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By Sarah McBride

SAN FRANCISCO, June 4 (Reuters) - Seattle-based Madrona Venture Group said it has raised $300 million for a new fund, its sixth, drawing on the growing start-up community in the backyard it shares with Amazon.com Inc and Microsoft Corp.

About half the entrepreneurs in its previous fund, raised three years ago, have worked at one of those two Seattle-area technology leaders, Madrona partner Tim Porter said. Those entrepreneurs benefit from Amazon's and Microsoft's diversification beyond their narrow beginnings.

"If you go back certainly 10 years, Amazon was an etailer, and Microsoft was Windows and Office," Porter said in an interview on Wednesday, referring to the popular software programs. "Today they're in so many different businesses."

Those newer businesses include entertainment; various infrastructure plays; and the remote data storage that has become known as the "cloud."

Madrona, then a young venture firm, was an early Amazon investor. Today, it manages $1.3 billion in assets, including high-profile active investments that predate startups spawned by Amazon or Microsoft.

Those include Redfin, a real estate company, and Apptio, an analytics company, whose chief executives had not worked at Amazon nor Microsoft before landing at their current ventures.

Madrona generally makes seed investments of under $1 million, and follows up with $2 million to $5 million for the next investment stage, generally known as Series A. It reserves additional sums to participate in larger investing rounds for its portfolio companies that continue to grow.

Madrona VI added no new institutional investors, something of a rarity in venture capital. At $300 million, it remains the same size as Madrona Fund V.

About 90 percent of Madrona's capital invested has gone to companies in the Pacific Northwest, with the largest share going to Seattle, followed by Portland, Oregon, and Vancouver, Canada.

(Reporting by Sarah McBride; Editing by Richard Chang)