The news: Trilogy Equity Partners, a longtime venture capital firm based in Bellevue, Wash., raised a second fund to back more early-stage Pacific Northwest tech startups.
The details: Trilogy aimed to raise $150 million for the fund and ended up reeling in “meaningfully” more than that. It did not confirm the exact amount. The firm plans to make around 20 investments out of the new fund.
The strategy: Trilogy invests in both B2B and B2C startups in the seed-to-Series A range, typically at $2-to-$4 million for each investment, and primarily backs companies based in the Pacific Northwest. It doesn’t focus on specific verticals but many of its investments fit into broad themes, such as companies that help customers draw insights from data.
The portfolio: Trilogy was an early backer of companies including digital remittance provider Remitly, which went public last year; Makara, a crypto service acquired by Betterment earlier this year; and Pushspring, a mobile marketing startup acquired by T-Mobile in 2019.
The history: A group of wireless industry execs including Seattle Mariners Chairman John Stanton launched Trilogy back in 2006 as they looked for entrepreneurs building wireless-related startups. Since then the firm has broadened its scope and invested $250 million across more than 80 companies out of its original fund. That fund was set up with a non-traditional structure — it was initially capitalized at $140 million but included reinvested proceeds from exited companies.
Trilogy is somewhat unconventional in that its first fund did not have outside investors in the form of limited partners. That has changed a bit but the firm remains a “very closely held entity,” according to a spokesperson.
The local ecosystem: Since Trilogy got off the ground there have been a bevy of newer firms aiming to tap into the growing tech talent base in Seattle. That means more competition for Trilogy — but it’s a welcome trend. More capital flowing through the Pacific Northwest can lead to more startups being launched, creating a “flywheel” effect, said Chuck Stonecipher, managing director.
“Silicon Valley has had that for decades. Everyone there wants to go and be an entrepreneur because they just look across the street and see it happening all day long,” he said. ”And we’re finally starting to get that quite a bit in Seattle. Ultimately that’s good for us because what feeds our businesses is lots of great entrepreneurs with great ideas that we can go and partner with.”
The future: The firm’s 4-person investment team isn’t too worried about a potential slowdown for startups amid the larger downturn for newly public companies and tech stocks overall. Even as some startups are cutting jobs, Trilogy isn’t yet advising portfolio companies to tighten their belts beyond typical guidance.
And it might be somewhat helpful if record-high valuations and gigantic seed funding rounds cool off, said Yuval Neeman, managing director at Trilogy.
“It actually will help the ecosystem because it created some really out-of-whack situations,” Neeman said. He noted how hiring has become difficult for some companies due to inflation and record funding rounds.
Trilogy also plans to continue its focus on diversity. About a third of its portfolio companies are led by at least one female executive.
“There’s economic opportunity,” said Amy McCullough, managing director. “There are terrific founders that are unconventional and different. We are very open to that mentality and think it’s often overlooked by other potential investors.”
