Hang around the regional startup ecosystem for any amount of time and you'll almost certainly hear something about the Portland Experiment.
It’s a reference to work begun in the mid-aughts, when a cadre of software founders from companies including Puppet, Elemental Technologies, Janrain and Urban Airship began raising significant venture capital rounds from California investors. But instead of following what had become the norm and moving their companies to the Bay Area following a capital infusion, these founders said, no. They would build their companies here.
It was a bold move. Portland was at the time essentially a flyover city, situated between Seattle and the Bay Area, where West Coast investors directed the majority of their capital. Silicon Valley investors, especially, preferred to keep their capital, and the startups that received it, close. It wasn't clear that Portland could attract the capital necessary to grow a vibrant startup sector.
The commitment of those Portland founders to take a chance and grow their companies in the Rose City planted the seeds for what today is an established software industry being propelled by new ideas and fresh capital.
“When Portland Incubator Experiment started (in 2009) we had a similar level of activity to what we are seeing now. Portland Seed Fund, Rogue Venture Partners, Oregon Angel Fund (Now Oregon Venture Fund) were all gaining steam,” said Rick Turoczy, general manager of the startup accelerator PIE and founder of the popular Silicon Florist blog. “That was a compelling time for early stage founders. There were people who were working to get them capital but they were also startup funds. Everybody was hustling.”
It was a virtuous cycle that continues to spin.
Scroll down to see profiles of these new investors and scouts
Those local groups have matured, writing larger checks from multi-year funds. The number of locally based funds is growing, too, and they are, with increasing frequency, being led by women and people of color or individuals who come from nontraditional backgrounds.
The companies they invest in reflect that, bringing much-needed capital to under-capitalized groups.
Of the $238.7 billion in venture capital invested so far this year, only $4.6 billion went to companies with women founders, according to the Venture Monitor report from Seattle research firm Pitchbook and the National Venture Capital Association.
A report from the business intelligence firm Crunchbase found that in 2020 just 2.6% of venture capital invested went to startups with Black and Latinx founders,
Disparity exists, too, in fundraising. A VC Human Capital Survey from NVCA and Deloitte found that 72% of investment professionals are white and 77% identify as male. Research has shown that investors tend to back founders that look like them or have similar backgrounds, which skews capital heavily toward companies with white, male founders.
Women have been well represented in leadership roles at Portland funds for years, including Angela Jackson at Portland Seed Fund, Diane Fraiman, the Portland-based partner for Seattle investor Voyager Capital, and Cascade Seed Fund's Julie Harrelson.
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As diversity has become a focus nationally for VC firms, Portland funds have started highlighting the demographic data of the founders they back.
However, there is always room for more.
Nitin Rai, managing partner of Elevate Capital, a fund launched in 2016 specifically to invest in underrepresented founders, welcomes the new additions, especially new managers that can offer new, added value to entrepreneurs.
"The more sources of capital, the better we are," said Rai. "It's good for the ecosystem to have new funds and new fund managers."
Melanie Strong, partner at Next Ventures, a firm she co-launched in 2019, keeps a folder of data handy on her computer for anyone who questions the need for diversity.
“If you have diversity, and even more importantly a female-led organization, you are likely to deliver 2x faster returns, almost 2x faster innovation and the research indicates you will have a company with a better culture,” said Strong, who is working with fellow Nike alum Kate Delhagen to get more ex-Nike women investing.
“So, if you only care about returns, if you only care about the success and the value you’re delivering as an investor, you’d want diversity bad,” she said. “But, we also think there’s this opportunity to invite new and different styles of leaders and thinkers into this space.”
On the following pages, you'll meet some of the Portland-area investors driving this new, more inclusive VC model. Not only are they bringing a new excitement and energy to the startup community, they are continuing the Portland Experiment.
The Builders: Marceau Michel and Himalaya Rao-Potlapally of Black Founders Matter Fund
The Scouts: Juan Barraza and Stephen Green
The Starters: Melanie Strong and Kate Delhagen
The Representative: Yesenia Gallardo Avila of Occam Advisors
