2018 GREATER SEATTLE INNOVATION ECOSYSTEM REPORT R. Joe Ottinger Iinnovate Leadership Network [email protected] Denis Trapido Faculty Coordinator Jessica Partnow and Ella Stefoglo University of Washington Bothell, School of Business 1 February 2019 2018 Seattle Technology Ecosystem Study Dear Readers, Now in our fourth year, the Puget Sound Innovation Ecosystem Report is published in conjunction with the University of Washington. The initial impetus for the report was to help entrepreneurs in the Puget Sound Region (Greater Seattle) understand the resources available to them as tech start-ups and scale-ups. Over time, we have expanded the report with the belief that a healthy innovation economy can improve companies, communities, and lives. We are happy to share our insights with you as we continue to explore building a healthy innovation economy. This 2018 report is our most ambitious to date, and includes the networks of investors, professionals, service providers and other resources supporting tech, health & life sciences, women in tech, commercial real estate, and Government elements of our Greater Seattle innovation ecosystem. A big thank you is due to the University of Washington Bothell, and the Greater Seattle innovation community of leaders, investors, service providers, and professionals for making this year’s report possible. We hope find it to be a valuable resource, and look forward to receiving your feedback at info@ innovatenetwork.com so we can improve future reports. Best wishes for a great 2019! R. Joe Ottinger CEO of Iinnovate Leadership Network P.S. Please Note that most everything that is underlined in the report is a Hyperlink to make it easier to contact the resources that could be helpful to you! 2018 Seattle Technology Ecosystem Study 2 ABOUT THE AUTHORS Iinnovate Leadership Network (pronounced “I innovate”) is an advisory firm and leadership network helping companies succeed in today’s innovation economy. Iinnovate’s services include: consulting, executive coaching, CEO forum groups, and Board retreats to help companies innovate, operate, and perform like today’s top performing technology companies. Iinnovate was founded by Joe Ottinger a former management consultant with Harvard Business School professor John Kotter, tech executive with public and private technology companies, and author of books and articles on innovation and leadership. Joe cares deeply about transforming companies, communities, and lives through innovation. Iinnovate has published the Greater Seattle Innovation Ecosystem Guide for the last 4 years, providing insights to entrepreneurs, investors, professionals, service providers, and support organizations. The University of Washington Bothell is a rapidly developing UW campus just north of Seattle. Its School of Business focuses on top quality research, excellence in teaching, and community engagement. The School’s undergraduate and MBA programs inspire business excellence by ensuring that current and future leaders have the skills needed to be successful in a constantly changing business world. UW Bothell is known for providing a participatory student experience grounded in hands-on learning, close relationships with faculty as teachers and mentors, and the personalized support of staff who are dedicated to student success. The campus is also distinguished by its focus on cross-disciplinary research and creative practice, connected learning and community engagement. 2018 Seattle Technology Ecosystem Study 3 TABLE OF CONTENTS EXECUTIVE SUMMARY GREATER SEATTLE INNOVATION ECONOMY 6 Innovation Ecosystem And Flywheel Model Innovation Ecosystem Startup Ecosystem Local/Regional Ecosystem Global Ecosystem Figure 1: Washington State Investment in R&D (2017) Figure 2: # Patents Issued By State (2018) Figure 3: Measures of Startup Competitiveness Figure 4: U.S. VC Amount ($M) Invested by State (5 Years) Figure 5: U.S. VC Deal Count by State (5 Years) Figure 6: Measures of Regional Competitiveness Figure 7: Measures of Global Competitiveness METHODOLOGY 12 GUIDE TO SEATTLE’S TECH ECOSYSTEM 13 Market Summary List of Top Media, Support Organizations, And Other Resources Reports Tech Tools & Resources Figure 8: Tech Sector At A Glance Figure 9: Greater Seattle VC Investment Activity (5 Years) Figure 10: % Change In VC Investment Activity By Stage (Q4 2018 v. Q4 2017) Figure 11: Top 10 Tech Company Investment Capital Raised In 2018 Figure 12: Top Greater Seattle VC Funds in 2018 Figure 13: Active VC Investment Firms From Out Of State GUIDE TO GREATER SEATTLE’S HEALTH & LIFE SCIENCES ECOSYSTEM 20 Market Summary Health & Life Sciences Support Organizations Health/Life Sciences Media And Support Information Figure 14: Health & Life Sciences Sector At A Glance Figure 15: Top Health & Life Sciences Exits in 2018 Figure 16: Top 10 Health & Life Sciences Investments 2018 Figure 17: Active Health & Life Sciences VC Firms With Offices In Washington State 2018 Seattle Technology Ecosystem Study 4 GOVERNMENT AND CROSS-SECTOR INNOVATION ECOSYSTEM INITIATIVES 26 Current Cross-Sector Initiatives INDEX OF TOP PROFESSIONALS, SERVICE PROVIDERS, AND SUPPORT ORGANIZATIONS 29 Index 1: Active Tech Angel Networks & Start-Up Studios Index 2: Active Health & Life Sciences Angel Networks With Offices in MSA Index 3: Active Tech Venture Capital Firms Index 4: Active Health & Life Sciences VCs With Offices in PNW MSA Index 5: Strategic Corporate Investors in MSA Index 6: Family Office And Closely Held PE Investors Index 7: Top Corporate Tech Lawyers Index 8: Select Commercial Banks Servicing Health & Life Sciences 2018 Index 9: Top Accountants in MSA Index 10: Top Service Providers in MSA Alternative Financing Venture Debt Executive Coaching & Leadership Development Financial Consulting & Outsourcing HR Consulting and Outsourcing Innovation, Scaling, and Renewal Advisory Insurance Investment Banks Leadership Networks Marketing Firms Patent Lawyers Talent Recruiting Sales Consulting & Outsourcing Strategy Index 11: Top Health & Life Sciences Organizations Index 12: Commercial Real Estate Brokerage Firms Index 13: List of Seattle Accelerators, Incubators, Co-Working Spaces & Startup Studios Index 14: Top Women Angel Investors Index 15: Women-Focused Angel Networks and VC Funds Index 16: Women’s Organizations For Tech and Health/ Life Sciences Index 17: Major Government And Academic Organizations In The MSA Index 18: Tech MeetUp Groups RECOGNITION & THANKS 70 2018 Seattle Technology Ecosystem Study 5 EXECUTIVE SUMMARY GREATER SEATTLE INNOVATION ECONOMY 2018 was a banner year for Greater Seattle’s innovation economy following record-breaking trend of investments and company value creation nationally. Most areas of the innovation economy in Greater Seattle were strengthened, including the innovation, start-up, local/ regional, and global ecosystems. In this report we provide a status update relating to the various elements that make up Greater Seattle’s innovation economy, and take a deep dive into the tech and health & life sciences sectors. Following is a summary of 2018’s accomplishments and challenges related to Greater Seattle’s innovation economy, and the fl ywheel eff ect that has resulted from its success. INNOVATION ECONOMY FLYWHEEL MODEL INNOVATION ECOSYSTEMS ECONOMY VALUE FLYWHEEL 2018 Seattle Technology Ecosystem Study 6 INNOVATION ECOSYSTEM (STRONG) MEASURES: Research and IP - The innovation ecosystem includes the networks and institutions that fund, develop, and commercialize intellectual property. In this area Washington State ranks high. Expenditures per capita into federally funded research and development organizations remain strong with the vast amount of funding coming from the federal government and going towards life sciences research. In addition, Washington remains strong when measuring new patents issued, a proxy for innovation. The University of Washington rivals competitors Stanford, MIT, and Harvard, in terms of its innovation investments, licenses issued, patents awarded, and spinouts. In addition, Microsoft and Amazon are two of the top companies in the world patenting new innovation, and Washington State is home to Pacific Northwest National Laboratory (PNNL), a world-class, federally funded research organization. Washington State ranks 7th among states with the most patents issued in 2018 behind California, New York, Texas, Massachusetts, Michigan, and Illinois. (See charts below.) Figure 1: Washington State Investment in R&D (2017) Source of R&D Funding Investment ($M) State Rank Federal Government $2.8 13 Industry $16.4 3 Universities $0.2 28 Other $0.6 19 Total $20.0 6 Population (2017) 7.4 13 Source: Research America Figure 2: # Patents Issued By State (2018) 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Ohio Texas Illinois Georgia California New York Michigan Washington New Jersey Massachusetts Source: USPTO, AztecIP 2018 Seattle Technology Ecosystem Study 7 STARTUP ECOSYSTEM (IMPROVING) MEASURES: New Company Activity & Investment - The start-up ecosystem includes all of the resources (money, talent, organizations) that support entrepreneurs to successfully start and grow new companies, including investment capital, human capital, and a supportive startup culture and network within a community. Although Greater Seattle ranks behind benchmark cities such as Boston in startup capital by a significant margin, with Boston having almost 4X the investment capital, this year saw the largest growth in new early stage VC and equivalent funds created in Greater