As we gear up for the new year it’s a new landscape for startups seeking investor backing. After about a decade of hearing that scale and growth were important above all else, investors are now looking at elements like execution and paths to profitability.
For many Portland-area startups, these qualities have always been important as capital wasn’t as free-flowing here as it was in places like Silicon Valley or New York. However, the region hasn’t been immune to the nationwide pull-back of venture capital activity.
We checked in with two investors from out of state who both have investments in the Portland region and who both have said they are actively looking for deals here. Below you will find some advice from Jenny Abramson, the Washington, D.C.-based founder and managing partner of Rethink Impact, and Brendan Wales, founding partner at Seattle-based Fuse.
Do you expect to look at deals in the Portland metro next year?
Abramson: Absolutely. Portland, and the Pacific Northwest region more broadly, has a growing entrepreneurship ecosystem. As the largest fund in the country backing female and non-binary CEOs tackling the world’s greatest problems, entrepreneurs in this area are particularly exciting to us at Rethink Impact as many seem eager to leverage technology and private sector innovation to address social and environmental needs.
As you have been poking around the Portland metro startup ecosystem, what are the differences you see in startups here versus Seattle or elsewhere? What is your take on deal quality?
Wales: Generally speaking, the businesses in Seattle tend to be cloud and AI infrastructure focused, whereas in Portland, they tend to be application layer. (Deal quality is) emerging! We are seeing fantastic founders who live there for the quality of life. We’d love to see more though.
Do you expect to invest in many new companies next year? What will it take for a founder to close a deal with you?
Wales: We will be quite active, just as we have been in 2023, where we made seven new investments. For a founder to partner with us, we are looking for ambitious people who have a non-consensus view of the world.
What is your No. 1 piece of advice for founders who are trying to fundraise next year?
Abramson: My advice to founders trying to fundraise next year is to be incredibly targeted in your outreach to funds whose underlying investment thesis is aligned with your business (versus blasting all VCs you know at once). In addition, I’m a big believer in sequencing the conversations, so you can learn from the feedback you get on your pitch before you talk to every potential investor in your network. Finally, there have been a number of investors who aren’t actually deploying capital, so I wouldn’t hesitate to ask an investor whether they’re doing deals right now (versus just trying to learn from you) before you spend a huge amount of time with them.
What general advice are you giving founders for 2024?
Wales: Stay focused on the fundamentals and keep the bar high when adding new people to the team.
Abramson: If there are ways you can ensure you have sufficient runway and optionality if your raise isn’t successful, I would start that work now, as that will give you more leverage in your conversations with potential investors and a strong plan B if the funding market, particularly for early-stage businesses, continues to decline. That said, just as importantly, if you have a fantastic business with strong unit economics, don’t be shy about raising now because investors are eager to put money behind great entrepreneurs who are hitting their numbers, so this could be an incredible moment for you to stand out.
