The national economy may be limping along, and IPOs seem like a distant dream, but that doesn’t mean it’s doomsday for the people who invest in startup businesses. Two prominent local venture capitalists—Chad Waite of OVP Venture Partners in Kirkland, WA, and Matt McIlwain of Madrona Venture Group in Seattle—both said their industry is getting along fine during a panel discussion this morning at an event hosted by the Washington Technology Industry Association.
“I took a week off in May and haven’t taken a day off since. So that should give you a sense of the level of activity,” said Waite, a 20-year veteran of OVP, in his opening remarks. “It’s been very steady now for two to three years.”
McIlwain disagreed with the mostly gloomy economic dispatches coming out of the other Washington, pointing out there was 3.3 percent growth in GDP in the second quarter. Here in Washington state, McIlwain said, things are humming along with more than 40 venture deals a quarter, putting this state in the same tier with Texas, New York, and Maryland. “It’s a pretty stable environment,” he said. Washington state, he added, “has a natural geographic advantage because we are far enough away from Silicon Valley that we can think our own thoughts,” yet close enough to stay on their radar screens.
Some people might suggest it doesn’t mean much to the region because VC represents a tiny slice of the economy. WTIA’s Ken Myer offered some thoughts about the impact of venture capital that were a bit surprising to me, at least. Revenue from venture-backed companies totaled $2.1 trillion last year, adding up to about one-seventh of the gross domestic product. About 10 million people work for companies that got their start with venture capital, including Microsoft, Starbucks, and Genentech. Geographically, California is the undisputed king of VC, with 411 venture deals in the second quarter, followed by Massachusetts at 99, New York with 66, and Washington in fourth place with 44.
It’s a long shot from the bubble days, as panelist John Cook of the Seattle P-I pointed out, adding that maybe that’s a good thing for maintaining a sustainable startup environment. He said he sees reason for optimism, noting that he’s preparing stories about a couple of big venture deals in the works.
