Startups Venture

Two Early Stage Startups Find Home And Funding In The Remote Northwest

The Northwest United States is known for its vast landscapes and nature reserves, of course, but what about venture funding? Earlier in March, Crunchbase News took a look at five startups in the Southeastern U.S. that are making fundraising moves. This week, we’re delving into the Northwest as our next up-close look at startups outside of Silicon Valley.

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The Northwest is nowhere near as relatively neglected as the South when it comes to VC funding. With Seattle (the home of tech giants like Amazon) and Portland being tech hubs, VCs from Silicon Valley and elsewhere do make their way up to Pacific Northwestern cities.

According to Crunchbase data, 603 seed and early-stage companies were funded in the Northwest—Idaho, Oregon, Montana, Washington and Wyoming—since January 2014. Of those listed, 48 percent were in companies headquartered in Seattle. An additional 15 percent were companies headquartered in the remaining areas of King County, Washington including Microsoft’s HQ in Redmond. Fifteen percent of startups were headquartered in Portland.

In light of this data, we were compelled to look at the remaining 128 companies outside of those areas. Two of the early stage startups that have raised since 2017 see advantages to living outside of traditional tech hubs. They found that their environments—whether that’s rural Montana or a college town in Washington—have proven beneficial to their growth.

Missoula, Montana: onX

Here in Montana, our work lives are intimately connected with our love of the outdoors. The self-reliance we learn in the woods infuses our work.

Founded in 2009 in Missoula, Montana, onX is a digital mapping company that was designed to help sport hunters navigate during hunting trips. Through its onX Hunt App and onX Hunt Chip, users can access topographical maps that outline distinct boundaries between private and public land.

Photo Credit: Courtney LeVesque

“It’s the hunter’s responsibility to know where they can legally hunt… Having a tool like this has been very powerful for hunters to easily access public lands that are not marked,” brand director Evan Davies told Crunchbase News in an email. According to Davies, the tool is also used by over 2,000 wildlife officers and has helped with land owner relationships.

Though the company has expressed that the partnership with the community and culture of Missoula was integral to the design and innovation of the company, onX now serves hundreds of thousands of customers across the United States.

“Montana is our home and we take pride in providing solutions for the community around us. That being said, only about 7% of customers are in Montana,” Davies wrote.

That potential for growth helped the company to raise a $20.3 million Series A led by Boston-based Summit Partners along with Silicon Valley-based Bessemer Venture Partners and others in February 2018. This was the first funding round from outside investors for the company.

“Investors are beginning to realize that geography doesn’t guarantee the best new ideas,” Davies expressed. “We’ve been seeing a lot of growth in the hunting tech industry over the years and that upward trend wont stop anytime soon. Opportunities exist everywhere.”

The company will be using the $20.3 million it raised to further expand its teams in Missoula and Bozeman. It also aims to assemble the definitive off-pavement mapping data set to help hunters, hikers, fishers, and other outdoor enthusiasts stay informed.

Spokane, Washington: Stay Alfred

Great business models can start anywhere.

Founded by a U.S. Army veteran Jordan Allen in 2011, Stay Alfred is a short-term urban vacation rental platform that seeks to combine the convenience of apartment-style vacation rental with hotel-style quality and consistency.

The Spokane, Washington-based company raised a $15 million Series A in January 2017 from a private equity group located in Seattle. The Series A was the first bout of outside funding for the company.

“The trend information is clear: Travelers, both business and leisure, want the opportunity to experience a city on a local level and enjoy the benefits of home, like a full kitchen, washer and dryer, and separate rooms for larger travel groups.” Allen told Crunchbase News in an email.

Photo courtesy of Stay Alfred

Stay Alfred operates in 22 cities across the United States, from San Diego to Atlanta, adding ten new destination cities since its Series A. The company recorded a reported $13.5 million in revenue in 2015 and $25 million in 2016. According to the company, its total revenue for 2017 was $34.8 million.

Allen expressed that while Spokane provides operational opportunities and efficiencies, being located outside of a hub makes fundraising strategies different from other companies.

“We had to initially prove ourselves a little bit more to the VC community,” Allen wrote. “It also means that our key leadership and board members have to stay connected to the VC communities even if we aren’t headquartered in any of the hubs.”

Still, he believes that fostering relationships and staying connected with VCs is a critical part of fundraising for any startup and that it’s important to stay on top of your game.

“I don’t think it would make much of a difference if we were located in Portland, Seattle, or Silicon Valley thanks to the fact that we are focused on staying connected. If we weren’t, it would be a different story.”

Like Tom Gay of Refer, he believes that the cost of living and lifestyle conveniences of places like Spokane will lead to more startups being created outside of hubs in the future.

“As big cities become too cost prohibitive for entrepreneurs to afford to take a chance and start a business, there will be more and more innovation coming out of cities like Spokane,” he explained. “We have an educated workforce thanks to the surrounding education system, an environment people want to live in, and the low cost to entry entrepreneurs need.”

Illustration: Li-Anne Dias

Editorial Update: An earlier version of this piece reported onX’s funding round to be $25 million. The company raised $20.3 million.

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