Madrona Raises Record $770M as VC Funds Shrink

Seattle-based venture capital firm Madrona Capital is marking its 30th anniversary with a significant milestone: raising $770 million in fresh capital, its largest fundraise to date. This achievement surpasses the $690 million raised across two funds in 2022, highlighting the firm’s enduring appeal to investors, even in a challenging market for venture fundraising.

A Testament to Performance and Investor Confidence

In a year when many venture capital firms are scaling back, Madrona’s ability to secure an 11% increase in capital speaks volumes about its strong track record and the confidence of its limited partners (LPs). According to managing director Matt McIlwain, the firm’s success in distributing capital back to its investors—thanks to strategic exits—has been a key differentiator.

In 2023, Madrona achieved notable exits, including the sale of Lexion to Docusign for $165 million and Octo AI to Nvidia for $250 million. “The LP community is generally concerned about distributions,” McIlwain shared. “I think we stood out as a firm that had done really well on that front, not just this past year, but over many years.”

A Legacy of Bold Investments

Madrona’s journey began in 1995 when a group of “super angels” backed a fledgling online bookseller called Amazon. Over the years, the firm has evolved into a multi-stage investor, supporting notable companies like Redfin, Smartsheet, Snowflake, and, more recently, AI startups such as Typeface and Runway.

While Madrona has historically leveraged its proximity to tech giants Amazon and Microsoft, the firm expanded its reach in 2022 by opening an office in Silicon Valley. This move reflects its ambition to diversify geographically and capitalize on opportunities beyond its Seattle roots.

Future Investments: AI and Beyond

With its fresh $770 million capital pool, Madrona plans to invest heavily in artificial intelligence. The firm aims to back AI applications across industries like travel and life sciences, as well as infrastructure companies that bridge the gap between foundational AI models and end-users.

The new capital will be divided between two funds:

• $490 million for early-stage investments: Funding approximately 30 pre-seed, seed, and Series A startups.
• The remaining for Series B and C funding: Supporting 12 growth-stage companies.

Optimism for 2025 and Beyond

As Madrona steps into its fourth decade, McIlwain describes the current climate as a “risk-on mindset” that fosters entrepreneurship and innovation. The firm is optimistic about the opportunities in 2025, particularly in AI and technology infrastructure, as it continues to champion transformative startups.

A Bright Future for Madrona

Madrona’s ability to adapt, evolve, and capitalize on emerging trends has solidified its position as a leader in the venture capital ecosystem. With its largest fundraise to date and a forward-looking investment strategy focused on AI, the firm is poised to shape the next wave of innovation while staying true to its roots in creating entrepreneurial success.