By: Nate Bek
If you’re a Seattle startup looking to raise venture capital, odds are most of that money will come from out-of-town investors.
Seattle is home to more than 25 active venture firms with about $2.1 billion in AUM. The ecosystem ranks fifth nationally for early-stage investments and has captured 3% of the nation's pre-seed and seed-on-SAFE dollars since 2020, according to an analysis by Carta’s Peter Walker. On a per capita basis, it ranks sixth among metros, averaging $448 in startup capital invested per person.
Despite these figures suggesting a strong local funding scene, there’s a hidden dependence on external capital.
The statistics paint a clear image: Out of the roughly $1.6 billion poured into Seattle startups across 162 seed through Series B rounds in 2023, Seattle’s venture firms led or co-led just 18 of those deals, according to data from Crunchbase, analyzed by Ascend.
A closer look reveals that in 2023, Seattle VCs contributed roughly 12% of the funding from seed to Series B rounds (methodology below). There’s a sharp decline post-seed stage; Seattle VCs accounted for about 25% of seed-stage funding but this plummeted to just 4% at the Series A level.
The issue cuts deeper than numbers. It’s about the ecosystem’s vitality. The recent departure of Techstars Seattle from the region — which cited a lack of venture dollars — was a telling blow. While the city is an AI hub and burgeons with technical talent, local investment is not scaling with startup growth.
This, in turn, creates a gap. More and more out-of-town investors are eying Seattle’s startups as an investment opportunity. Notably, Point72 and Bonfire have set up shop in Seattle, while investments flowing from the Bay Area is a well-documented phenomenon. (Here’s a deeper look at out-of-town investors that invest in Seattle.)
Local firms are also stepping in to fill the void, especially at the earlier stages. The Alliance of Angels says it’s raising new cash; Breakwater, led by William Finney and Peter Mueller, announced a fresh $10 million fund to buoy Pacific Northwest startups; Seattle-based Breakers, led by Annie Lunchsinger, is backing early-stage startups; and Swizzle Ventures, led by Jessica Kamada, is raising cash. Here at Ascend we’ve backed more than 60 local pre-seed startups across two funds.
Despite this, most startups are expected to think outside of Seattle if they want to fill out their rounds. And they should expect their local angel and pre-seed investors to help make those connections with Silicon Valley funds.
The ecosystem is not capital-constrained: Seattle is nationally recognized as a vital startup creation engine. With 10 and 11 figure exits becoming a yearly occurrence, the town is a magnet for talent and capital. The best companies and founders do indeed get funded — just, more often than not, by investors from outside the region.
We tracked early-stage funding rounds in Seattle in 2023. Search the index below for deal figures and lead investors.
Methodology: To calculate the total seed through Series B funding involving Seattle VCs in 2023, we analyzed Crunchbase for active Seattle VC firms leading deals. This involved comparing their contributions to the overall deal volume of the period. It's important to note some deals did not specify a lead investor and pre-seed rounds were excluded due to insufficient data in the seed-on-SAFEs category. The Seattle VCs' share of the funding was then determined by dividing the total seed to Series B funding by the deal value from rounds led or co-led by Seattle VCs.
*NOTE: Figures and analysis do not necessarily portray exact data and merely serve as a snapshot of Seattle’s VC landscape. For instance, some rounds that were led or co-led by Seattle VCs included participation from out-of-town investors (and vice-versa).