I don’t want to read too much into the arbitrary turn of the calendar, but it seems like we’re in the middle of a pretty interesting moment for Seattle’s technology scene.
One of our mega-companies may be on the wane, while the other appears to be headed for much bigger things. The startup scene is growing and gaining the connective tissue it needs to expand in the years ahead. And Silicon Valley companies big and small continue flocking north to grab high-tech talent, seriously diversifying the gene pool.
At the same time, this region hasn’t escaped national questions about the vitality of early stage fundraising and the market for new public companies—not to mention the generally stagnant economy and need for more higher education. To get a jump on the year ahead, we’ve put together this list of a dozen questions to keep your eye on. In no particular order:
How healthy is the VC sector?
Recent numbers for venture capital firms nationally were not very encouraging: The amount of money raised by VCs was low, and limited partners showed a preference for investing mostly with the biggest-name funds, according to reports from analysts and industry groups.
Here in the Seattle area, we saw Polaris Venture Partners close up its branch and head for Silicon Valley. On the positive side, Voyager Capital filed paperwork for a new fund that could be worth up to $125 million. Another notable trend was the volume of investments for Bellevue’s Ignition Partners in the cloud computing sector, particularly in the Bay Area—attributable in large part to the addition of Frank Artale, who brought his connections to the firm.
Some big acquisitions, or even a big IPO or two, would certainly cure a lot of the uncertainty for the VC sector overall. If that doesn’t happen, keep an eye out for firms fading away or having difficulty shaking the trees for new money.
Where will our big companies go for acquisitions?
Microsoft took the cake in 2011 with its $8.5 billion mega-buyout of Skype, helped along by a desire to keep some of its considerable offshore money out of Uncle Sam’s hands. Beyond that, there were a few smaller deals—Austin, TX-based game studio Twisted Pixel, San Mateo, CA video technology company VideoSurf, and enterprise software partner Prodiance, based in Pleasanton, CA. Will Redmond make more big buys in 2012 with its almost unfathomably big cash horde of $57 billion? Despite its protestations otherwise, there’s plenty of speculation that Microsoft might need to actually grab phone hardware partner Nokia to really make a dent in the mobile market.
Amazon wasn’t as prolific, with only Europe’s Lovefilm listed on its official acquisition roster this year. Amazon has typically made a handful of acquisitions a year in the recent past, but it was focused quite powerfully on ramping up the hardware side of the business this year with the Kindle Fire. That, of course, helps buttress reports that Amazon may be interested in HP’s Palm assets.
And of course, both companies have been rumored to be looking into buying Research in Motion, the struggling maker of BlackBerry smartphones.
Will we get more angels?
One of the most frustrating things for tech entrepreneurs in the Seattle area is the impression that a ton of tech-created wealth is sitting on the sidelines of the startup scene. The continued vitality of the TechStars program, big-company veterans jumping into early stage companies, and further efforts to develop the seedbed for angel investors will all help.
As we see more out-of-towners move north to poach talent, we are seeing some very interestingwatch connections take hold in the startup community. While technology and infrastructure keeps getting cheaper, the Seattle area probably needs to keep working to cultivate a larger group of early stage investors who can take advantage of this increasingly rich network of people and ideas.
What happens to T-Mobile?
The spectacular flameout of the $39 billion AT&T takeover might have brought some sighs of relief to folks working at Bellevue’s T-Mobile. But any calm was probably short-lived, since parent company Deutsche Telekom doesn’t want the company long-term.
So what happens to the No. 4 U.S. carrier? It looks like the near term could see a bit of refocusing on the core business—boosted by the spectrum assets reaped from AT&T’s breakup penalty—while waiting for new partners or acquirers to get their offers ready. It’s probably a good enough bet that another carrier won’t be making the buy, since Verizon would run into the same antitrust problems that doomed AT&T, and Sprint has a completely different technology stack—not to mention its own problems. Look for an interesting bid by TV providers, who have been trying to get their hands on the mobile phone market for some time.
When will we see another tech IPO?
This past year’s big IPO victory was Zillow (NASDAQ: [[ticker:Z]]) finally going public. But it’s hardly a new company, in startup terms, and it had been a long time since a truly home-grown company had hit the stock markets before then.
The IPO market has been seen as up and down through the rest of 2011. If it gets a little more solid in 2012, we’ve got at least three companies that are pretty close to getting their own ticker symbol: Traffic-data provider Inrix, semiconductor laser maker nLight Photonics, and RFID maker Impinj, which filed its preliminary paperwork this summer but hasn’t done much with it since then.
Which small company the next big (or even medium) thing?
Game developer PopCap’s purchase for up to $1.3 billion by Electronic Arts and mobile software startup Swype’s $100 million buyout by Nuance were among the biggest acquisitions in
