More operators. More sizzle. More founders investing in each other. And making the city a better place to live.
Those are some of the ingredients that could boost Seattle’s startup scene, according to four early stage venture capitalists who spoke on a panel at the Seattle AI Investor Summit + Showcase, hosted by the Technology Alliance on Tuesday.
Seattle often gets criticized for not having enough homegrown money to help fuel the next great tech startups. The number of firms deploying dollars pales in comparison to Silicon Valley, New York, Boston, and Los Angeles.
But the panelists didn’t point to that as a pressing problem.
“We spent a lot of time here navel gazing and beating ourselves up for something that I don’t think matters — which is the number of VCs or the amount of money that lives here and gets deployed in this ecosystem,” said Kirby Winfield, founding general partner of Seattle venture firm Ascend.
Most Seattle startups raise investment from firms based outside Washington state. That’s a feature, not a bug, said Leslie Feinzaig, founder and general partner of Graham & Walker.
“Being a net importer of dollars is something we should be proud of,” she said.
Feinzaig said there’s something else lacking from the Seattle ecosystem — founders supporting founders.
“At the very earliest stages, one thing that I see in the Bay Area, and to a lesser extent New York and L.A., is founders investing in each other — really experienced startup people being the angel investors that fuel other startups,” Feinzaig said.
Winfield agreed, calling it a “level of connectivity” between founders at different stages in their careers that can make it easier for investors to back startups in those types of entrepreneurial communities.
There are efforts in Seattle to try to create those connections. Founders’ Co-op investor Aviel Ginzburg recently unveiled Seattle Foundations, a new invite-only organization and shared workspace that supports tech founders by surrounding them with fellow entrepreneurs and experienced startup mentors.
The panelists also touched on another critique — or advantage, depending on who you ask — of Seattle startup founders: their general subduedness.
Feinzaig said Seattle founders “need a little bit more sizzle” in their pitches. Her firm mainly invests outside the region, and she’s noticed a difference in the delivery of other founders.
The local startup scene also has too much “Seattle Nice” that can stall future innovation, said Heather Redman, managing partner at Flying Fish. In other words: investors and advisors need to be more transparent and direct when giving feedback.
“In the Bay Area, I think there’s a little bit more ruthlessness of, ‘that’s not going to get funded, so don’t do it. Do another thing.’ And Seattle doesn’t always do that,” Redman said.
Seattle is certainly not lacking in talent, particularly top engineers. The problem is that many have “beautiful golden handcuffs” at large tech companies based in the region such as Microsoft and Amazon, said Ken Horenstein, founder and partner at Pack Ventures.
“When you’re an AI engineer that can make seven figures, it would be insane to go start a company,” he said.
Horenstein, whose fund backs companies with ties to the University of Washington, said there are ways local government can incentivize entrepreneurial activity.
He added that Seattle could use more “operators.” He said many experienced startup execs, particularly in life sciences, move away after their company gets acquired. “We need to keep those people here,” he said.
The investors also talked about elevating Seattle’s image on a national and international stage.
“The number one thing to concentrate on is making this the best place to live,” Redman said. “If we can attract the very best talent here, because this is where people want to live and where they want to raise their families, then we will be the winners in the long run of the talent race, and we will have the best companies.”
