Eric Rosenfeld is the founder and a partner of the Oregon Venture Fund. What could this portend for the greater Portland economy? My forecast…
Like the Inuit and snow, Portlanders may have 50 different descriptions for rain, from “it’s just a dry rain” to the fleeting “sunshower” and the omnipresent “heavy drizzle.” In terms of financings for startup companies in Portland, 2018 is shaping to be the year of the downpour.
At least $467 million in venture capital has poured into over 40 home-grown companies so far, nearly three times the level at this time last year. While 12-year old software company Jama received the largest slug – a record $200 million in growth-equity financing — new pre-revenue startups like Bumped and AbSci are also being showered with $12 million-sized buckets of seed capital.
More capital: For VCs and private equity funds, Portland is now clearly on their map — a growing dot on the former white space between the Bay Area and Seattle. We’ve come a long way since local startups depended on local investors for capital and when those few local investors with deep pockets also seemed to be cursed with short arms. Once a national VC firm has a single investment in Portland, the pattern is to make more – “Heck, as long as we’re here….”
More quality jobs: More capital means more jobs and, more importantly, higher quality jobs. The Oregon Venture Fund and the Brentwood Group’s annual survey of local venture-funded startups reveals that, even after adjusting for our lower cost of living, Portland startups pay 10 to 20 percent less than Seattle and the Bay Area. Better capitalized companies are better positioned to offer better paying jobs. And the more people working in the entrepreneurial sector means more future entrepreneurs-in-training, which leads to…
More startups: As financing spigots open and companies become less reliant on the local drip-irrigation of capital, more people will turn to entrepreneurship as an economically viable and professionally acceptable career path. A new generation of successful Portland-area entrepreneurs like Srinivasa Nagalla, CEO of DiabetOmics, and Claudia Jaffe, founder of Lumencor, are becoming inspiring role models and advisors and writing the playbook for others.
More wealth: Every dollar of financing into a local company comes with a string attached. Typically, the expectation for a seed financing round is a 10X return on investment and a 5X return for a growth round, with proceeds shared among founders, employees, and investors. As engines of innovation and job and wealth creation, the local startups that do succeed are creating Portland’s future major investors, philanthropists, and taxpayers, benefitting the broader region.
The local startups and growth companies being pelted with venture capital are endeavoring to create the large employers and driving industries of our future. They are exporting high-value software, electronics, medical technology, advanced materials, and services out of our region and, as a result, importing wealth into our region.
While Portland is still a long way from Palo Alto, where VCs hide in trees and throw money at passersby, our hardworking entrepreneurs are beginning to be recognized and supported in larger numbers by world-class investors. This could finally be Portland’s day in the sun.