A new startup program, born in Seattle, aims to help tech workers leave big companies and launch their own ventures, aiming to generate a surge of new entrepreneurs in the local ecosystem.
Venture Out will launch its inaugural 10-week program next month with plans to accept 8-to-12 groups who have a startup idea but need help leaving their cushy day job to make the leap.
Seattle has become a global epicenter for tech talent, but many of the top engineers, data scientists, program managers and others are at working big companies such as Amazon or Microsoft, or one of the 130-plus engineering outposts in the region — Facebook, Google, Salesforce, Oracle, and more have large offices.
As a result, those giants get blamed for sucking up much of the would-be entrepreneurial talent across Seattle with their “golden handcuffs” and opportunities to work on some of the leading technologies. That trend, along with a lack of homegrown investment firms, is one potential reason for why Seattle’s startup ecosystem is not as strong as some might expect.
Venture Out aims to be “the ultimate two-way door for founders working at large tech companies actively building their startup while still in their day job,” said co-founder Sean Sternbach, who previously spent nearly three years as a manager at Amazon. That’s where he began thinking deeply about why some of his colleagues weren’t pursuing their awesome startup visions.
“They did not have the support network to help them build their startup,” Sternbach said.
Last year he launched an invite-only monthly event designed for founders, where successes and struggles could be shared, with the intention of receiving crowdsourced support from other founders.
That grew into a 170-person community of people in Seattle either “venturing out,” or moonlighting on their startup.
“The number one request from our member base was to receive more support, in a more formalized fashion, and that is how we evolved into creating a 10-week program,” Sternbach explained.
Sternbach left Amazon in March and teamed up with Ken Horenstein, who previously was a manager at M12, Microsoft’s venture fund, to help officially start Venture Out. Advising the organization is Pablo Rodriguez-Brown, an Amazonian and startup vet who leads the Seattle Xoogler group, and Jean Paoli, a former longtime Microsoft exec who co-founded Docugami in 2017.
The program — which does not describe itself as an “accelerator” — has participation from more than 50 mentors who will help support accepted founders, including Aviel Ginzburg, general partner at Seattle venture capital firm Founders’ Co-op. Other well-known startups CEOs and angel investors are connected to Venture Out and some have also invested in the company, which will soon close its own $600,000 investment.
“Seattle has more product and technical talent locked up in big companies than anywhere else in the world, and while we have the start of world class resources to help folks build or join a startup once they’ve made the leap out on their own, venturing out can still feel like a daunting one way door to folks,” Ginzburg told GeekWire. “Through engaging with the Venture Out community, I’ve already seen how they are building a bridge between the old company town Seattle and a new entrepreneurial one.”
Venture Out will take 4 percent equity in each accepted company and also offers a “Venture Out equity back guarantee” — see details on the FAQ page. Its program requires members to work 10-to-20 hours per week on their startup. It is targeting companies that have raised less than $500,000.
In some ways, Venture Out is betting that what happened with Microsoft will repeat itself with Amazon and other tech giants in the region. A recent GeekWire analysis shows that nearly 25 percent of CEOs leading startups on the GeekWire 200 — our index of top privately held tech startups in the Pacific Northwest — had previous experience at Microsoft, which was founded in 1975.
Sternbach said that Venture Out believes that “great founders will come from large companies,” but they need help adjusting to startup life.
“Many of the founders we support are used to having access to large budgets and a large existing customer base,” he said. “Yet, these founders do not have experience operating in a cash-constrained environment or acquiring that first user. Focused mentorship and tactics to make this transition is an area we see opportunity to positively impact the startup ecosystem in Seattle.”
There are a few newer startup investment “studios” in Seattle targeting a similar demographic, such as Madrona Venture Labs, which raised an $11 million fund in May, or Pioneer Square Labs, created in 2015 using the concept of rapidly testing and validating new ideas before recruiting an executive team to build out a spin-off company. PSL launched an $80 million venture fund last year.
But Sternbach said there isn’t a similar program either in Seattle or across the globe that replicates its vision of supporting founders who have experience working at large tech companies.
“Our founders are busy managing their day job, family, etc.,” he said. “They come to us because they do not have time to read all the blogs, MOOCs, etc. on how to build their startup. This program provides the resources and accountability that this unique breed of founders are seeking to take their startup to the next stage.”
Source: Geek Wire