Seattle-based venture capital firm Madrona Venture Group has raised a $120 million extension fund to throw more weight behind its existing portfolio companies.
The extension builds on Fund 7, a $300 million fund Madrona raised in 2017 and began investing in 2018. With the additional money, Madrona can continue to grow its companies in this current record-breaking venture capital ecosystem.
"We don’t know how the capital markets and macro environment for company building will change in the years ahead. And we can only estimate the timing and need for follow-on capital for each individual company in the Fund 7 portfolio," Matt McIlwain, managing director at Madrona, wrote in a blog post announcing the extension fund. "But we are confident that the Madrona team will be there to help our companies grow with our long-term mindset, hard work and capital."
Madrona's portfolio companies backed by Fund 7 include OctoML, Seekout and Esper. According to McIlwain, venture capital firms usually produce follow-on investments from the reserves of a fund, the successful exit of a different portfolio company, a different fund or a special purpose vehicle. He added that given the ballooning investment rounds startups are landing with increased frequency, Fund 7 doesn't have enough in reserves or through successful exits yet, leading Madrona to create a separate extension fund.
The startup and venture capital ecosystem has been on a tear recently. According to a recent PitchBook and National Venture Capital Association report, the Seattle area produced 360 venture capital deals worth $5.1 billion during the first nine months of 2021, up from $4.5 billion for all of 2020. U.S. companies as a whole landed $238.7 billion during the first nine months of 2021, up from $166.4 billion in all of 2020, which had been a record year.
In addition to the new fund announcement on Thursday, Madrona also named three new strategic directors: Apptio founder and CEO Sunny Gupta, NanoString senior director of business development and strategic alliances Charlotte Hubbert and Tableau CEO Mark Nelson.
“One of the unique elements of the Seattle tech community is that it is a place where people are community builders, and we are excited to have these three talented executives and builders join Madrona as strategic directors,” McIlwain said in a news release.
Madrona was founded in 1995. In late 2020, Madrona raised $345 million for Fund 8 and $160 million for Acceleration Fund 2.
