Deals

Pacific Northwest rains angel dollars (as well as actual rain) on seed-stage startups

Up in the wooded climes of the Pacific Northwest, a startup ecosystem is flourishing right alongside the salmon, eagles, and elk. Since the beginning of the year, the Keiretsu Forum Northwest has invested almost $16 million in early stage companies.

The Keiretsu Forum is an international investment network of angel investors with over 1,000 accredited members and 21 chapters. The Northwest chapter spans Washington, Oregon, Idaho, and Vancouver, and has 230 members. The staff conducts due diligence of startups and creates reports, which its community can reference while making investment decisions. Community members can also use the forum to evaluate opportunities and collaborate on strategy. It emphasizes local markets, but promising companies are “syndicated” so investors have access to deals in other regions.

The $16 million was distributed across 27 companies. Of these 27, 24 were initial investments. Chapter President Nathan McDonald said this reflects Keiretsu’s strategy of only financing companies that have a clear business model and shouldn’t need follow-up funding.

“We have a frontier mentality of building products that people are actually going to buy,” he said. “We believe in self-sufficiency. There isn’t the same kind of capital up here, so we rely on getting the companies cash-flow positive or to an exit point.”

Technology companies received 39 percent of the funding, followed closely by life sciences at 36 percent. McDonald said that while commerce surrounding natural resources, such as timber and fishing, aerospace, and nonprofits are also vibrant contributors to the local economy, the financial services sector isn’t.

“There is a lack of fund mangers up here, even though it is a tax friendly environment,” he said. “Historically, banks here were bought up by out of town banks that took control and use their offices here as a way of extracting wealth and sucking it back to be managed at the home office in New York, San Francisco, or Chicago. We want to convince more successful CEOs with talent to be fund managers as a kind of entrepreneurial exercise.”

Here is the complete list of companies that received investment from members of the Keiretsu Forum Northwest this year:

  • Washington: AdSpore; Blaze Bioscience; Clean Fuel Illinois; Digital Scirocco; Enroute Systems Corporation; Greenwood; iCapEquity; InstaCover; Olympus Games; OneOcean; OtoMetrix Medical Technologies; Pacific West Land Fund II; Profit Mastery; Pyatt/Broadmark Fund; SkyKick; Sygnet Rail Technologies; Valant Medical Solutions; Vega Performance Marketing
  • Oregon: 4-Tell; Galleon Ventures; Journey Gym; Oh Shoes; Puralytics
  • Idaho: LoanTek
  • Illinois: Sword Diagnostics
  • Texas: Savara
  • Utah: Funium