Seattle needs more angel investors who are more comfortable with risky startup bets.
That’s the take from James Newell, a longtime venture capitalist and managing director at Seattle-based firm Voyager Capital, who spoke at a lunch event hosted by Silicon Valley Bank on Thursday.
The lack of angel investors is a longstanding critique of the Seattle startup ecosystem, especially given the amount of wealthy tech execs in town who made their fortunes at places like Microsoft and Amazon.
“I don’t know who’s got a big checkbook here,” Newell said, speaking to the crowd at the Columbia Tower Club overlooking Puget Sound. “We just need more low-conviction check writers.”
Newell brings a unique perspective, given that the Port Orchard, Wash., native spent more than a decade in the Bay Area as an investor before returning home in 2016 and joining Voyager, a 27-year-old firm that invests in early stage B2B startups across the Pacific Northwest.
“What we really need is [angel investors] who have had significant liquidity, who just say, you seem like a good person. I don’t really know what you do, but I’m in,” Newell said. And those people might introduce the company to other angel investing peers, he said.
That type of vibe is more common in Silicon Valley but has “never taken hold up here,” Newell said.
“We have no cachet here associated with being an angel investor,” he said.
Part of that is because of the region’s culture, which can be more insular and understated, Newell said.
And folks who made their money at a big corporation might not be comfortable assessing potential startup investments.
“You don’t know what good looks like,” Newell said. “And you also don’t have psychological pressure to pay back into the ecosystem that created your wealth, because it didn’t create your wealth.”
Angel investors are a crucial part of a startup’s journey. They put up the initial money behind a startup, often investing in just an idea at the earliest stage.
There are various efforts across Seattle and the Pacific Northwest to help generate angel activity and educate first-time startup investors, such as Seattle Angel Conference, Alliance of Angels, and other initiatives.
“There are angel investors here,” Newell said. “But they’re just harder to find.”
Washington state had 2.7% of all pre-seed deals over the past year, according to Carta. That compares to 38% for California, and ranks behind states such as Massachusetts, Florida, and Texas.
https://ift.tt/jmeIki1 September 30, 2024 at 02:55PM GeekWire
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