Madrona just announced its biggest fund ever, closing on $770M as other venture funds grow smaller

Seattle-based Madrona Ventures is celebrating its 30 years in business by raising $770 million in fresh capital. This is the firm’s largest fundraise to date, exceeding $690 million across two funds Madrona closed in 2022. 

While an 11% capital pool upsize may not seem significant, any increase at a time when many venture outfits are forced to reduce their fund hauls is a sign that limited partners are excited about the firm’s prospects and recent track record. 

Madrona’s managing director, Matt McIlwain, told TechCrunch that it helped that last year — in a market where exits were few and far between — the firm sold a few portfolio companies and distributed capital to its investors. The firm’s recent exits include Lexion, which sold to Docusign for $165 million, and Octo AI, which Nvidia acquired for a reported $250 million.

“The LP community is generally concerned about distributions,” McIlwain said. “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.”

Madrona started as a group of “super angels” who wrote a check to an online bookseller, Amazon, in 1995. The firm has since evolved into a multi-stage investor that has backed companies like Redfin, Smartsheet, Snowflake, and, more recently, AI startups Typeface and Runway.

Although Madrona undoubtedly benefited from being the largest VC firm in the same geographic location as Amazon and Microsoft, it decided to venture beyond Seattle by opening an office in Silicon Valley in 2022.

McIlwain said that the fresh capital will be used to invest in AI applications in domains ranging from travel to life sciences, as well as in infrastructure companies that “can remove friction” between foundational models and users. The firm will back about 30 pre-seed, seed, and Series A startups from its approximately $490 million early-stage fund, and the remaining capital will go toward 12 companies raising their Series B or Series C.

As Madrona enters its fourth decade, it is extremely optimistic about what’s ahead in 2025. McIlwain described the current conditions as a “risk-on mindset” that will help foster entrepreneurship and create value.