Seattle has become a top destination for tech talent. Amazon, Microsoft, and Boeing all call it their homes, while just about every other major tech company under the sun has set up shop in the city in a big way.
Madrona Venture Labs, a startup studio backed by Madrona Venture Group, is betting that tech talent cooped up at tech behemoths like Amazon and Microsoft are ready to strike it big on their own with its latest $11 million fund. The fund will go towards building 8 to 12 companies over the next year.
“We’ve had executives from those kind of companies that had seven-figure comp packages leave to do this,” Managing Director Mike Fridgen said of the Madrona Venture Labs program. “At some point they’re at a place financially where they can take more risks and do what they’re actually passionate about.”
This program operates under a slightly different model than accelerators like the famed Y Combinator. Where other programs accept applications, choose a select few startups, and provide early funding and rigorous mentorship, Madrona Venture Labs enters the equation right at the beginning.
As Fridgen explains, Madrona Venture Labs works with would-be founders to help them find and develop an idea for a startup. Then, Madrona matches the founder with a team to build the company. It can overcome a major hurdle to entrepreneurship, says Fridgen, by giving the newly-minted CEO an idea and a team right off the bat.
“They immediately gave me a team, with a Helix designer, a business analyst, an interim CTO, and a developer,” said Mia Lewin, founder and CEO of Spruce Up, a Madrona Venture Labs spin-off company. “Instead of going through the traditional founding process trying to validate your idea, I went with the team to validation process.”
Madrona Venture Labs works closely with the investment arm of Madrona to identify opportunities, both in the market and in terms of technology. It then goes out through its connections in Seattle’s talent pool for the top artificial intelligence and machine learning technologists to help actually build the solutions.
Having to compete with the larger companies in terms of paycheck and compensation may be difficult, Fridgen said, especially with Amazon literally in its backyard. But there is something special that makes executives leave the comfortable confines of an established organization for the challenges of entrepreneurship.
“We are unlocking the value of entrepreneurs in our market by providing value for extremely capable executives in our market that, without this process, wouldn’t start a company,” Fridgen said. “What we focus on is venture capability and diversity, so we are trying to expand the pool of founders that we attract.”
Fridgen says that Madrona is the only investment group of its size in Seattle compared to 85 similar firms in Silicon Valley, giving Madrona Venture Labs graduates a leg up on other entrepreneurs hoping to gain a foothold in the market.
“It’s an opportunity to provide onboarding for executives at companies in larger companies and folks not as familiar with building their own company,” Fridgen said. “We are their cofounders, and connecting on that level is less obvious and capital is less available. Our goal is to remove all the hurdles to build the company by bringing it into the Lab.”