Seattle’s Type A technophiles used to be kept awake by strong coffee. These days the tech drought is the culprit. The deflation of the tech boom has hit the Pacific Northwest especially hard. Alan Frazier, founder and managing partner of Seattle-based Frazier Healthcare Ventures, says that the Northwest has been burned more than other areas of the country because it had a higher percentage of Internet investments. And he puts the blame squarely on the shoulders of the venture capital community.
“At the height of the bubble, there were 35 local venture firms,” says Frazier. “That’s ridiculous. They’re all going to go away. When the havoc is wreaked, four or five good firms will remain.”
The area is already thinning out. In January alone, Mohr, Davidow Ventures (MDV) and Atlas Venture announced that they were closing their Seattle offices. Technology law firm Cooley Godward shuttered its Seattle office that same month, citing a poor economic climate. “I looked over there one day and [Cooley Godward] were just gone-they even took the fish,” says a venture capitalist, who was in the same office complex. The January closures followed the departure of Garage Technology Ventures and Watershed Capital. The status of some smaller firms, like Pacific Northwest Partners and Vault Capital is uncertain, since they didn’t respond to phone calls.
David Alhadeff, founder of technology venture fund Velocity Capital and son of Seattle retail startup legend Victor Alhadeff (founder of Egghead and Briazz), has a brutally candid assessment of the area: “New company formation has ground to a halt. We’ve gone from one meeting a day in 2000 to two or three meetings a week today.” Alhadeff adds: “There is still energy and excitement here, but people are taking time in doing deals. I wish I could be more optimistic, but there is no reason to think things will improve.”
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