"Great moments are born from great opportunity. And that's what you have here tonight.”
–Herb Brooks, U.S. Olympic Hockey Team Coach, Opening Line of Speech Before the United States Played the Soviet Union, February 22, 1980
We are pleased to announce that we have closed $20 million to launch our third company-creation studio. This third studio is our largest to date, with the prior two studios having raised $16 million and $12 million, respectively. We also manage $180 million through PSL Ventures, our traditional early-stage venture fund that invests in both studio and non-studio companies.
Over the last eight years, our studio has spun out 33 venture-backed companies, each catalyzed from scratch in our Seattle-based lab. By both assets under management and portfolio size, we have grown to become the largest venture studio in our corner of the world, the Pacific Northwest. Our companies have employed well over a thousand people and made a positive impact across many industries.
Some of our portfolio companies are leaders in their respective domains, such as Boundless in the immigration space and Kevala in health care staffing software. Others have invented completely new categories, such as SecureSave for emergency savings accounts and Dance Church for inclusive community dance experiences. Several are tackling the world’s most important challenges, including Joon which is addressing teen mental health and Ever.green and Recurrent which are accelerating the transition to renewable energy.
Looking back, what we are most proud of are the exceptional founders we have partnered with to build these companies. Our mission is simple: to do everything we can to make these entrepreneurs as successful as possible in big and small ways. Our team consists of senior software engineers, designers, marketers, recruiters, and business leaders, and we are purpose-built to help founders fill holes and give them the best shot to achieve product-market fit as cost-effectively and as quickly as possible.
In addition to launching companies as PSL, we also have partnered with and are building companies together with some of the world’s leading corporations through our joint corporate studio efforts. We believe that by leveraging the unique distribution, data, and knowledge assets of these large enterprises we often can build better companies than we could by ourselves. To date, we have partnered with Fortive, FIS, Capital One, Rover, and Kroger.
Foundry led the funding for our new studio, as it has for PSL’s last two studios. We added some wonderful new investors, such as Vault Capital, Atlas Capital Ventures, and WestRiver Group, along with our wonderful set of returning investors. In this challenging market climate, especially for new technology startups, we do not take their commitment to us for granted.
When we started PSL eight years ago, only a handful of startup studios existed. Now, according to a recent article in Harvard Business Review and the Global Startup Studio Network, there are more than 720 startup studios globally.
Most of these studios will fail.
It’s hard to launch new companies and especially difficult to find incredibly talented founders to partner with when you are taking a meaningful co-founding equity stake.
Moreover, we are in a particularly brutal environment for early-stage technology company fundraising. Late-stage VC fundraising has mostly dried up, and many VCs are protecting their existing portfolios versus making new investments. Unless you are in the generative AI or climate tech space, the bar for startups looking to raise VC capital is higher than it has been in the last 20 years, typically requiring not just stellar teams but also more meaningful customer traction than it has in years past.
In the last year, we killed several companies that would have raised money relatively easily in a less capital-constrained environment.
Despite competition and macro-economic headwinds, we believe that there has never been a better time for a startup studio. Technology is always changing. Most of the time that change is incremental. Then change comes that is more fundamental. It impacts the world in ways that would have been hard to imagine just years ago. We are in the top half of the first inning of one of those underlying technological changes with the rapid improvement of generative AI driven by large language models (LLMs).
AI has been around for many years, but LLMs have provided us with a step function improvement in the ability of AI to address real-world issues. LLMs are essentially a type of AI trained on massive amounts of data (think the internet) to produce human-like responses to natural language inputs. The applications for this incarnation of AI are endless.
Our studio exists to take advantage of these kinds of fundamental technological shifts. If we do our jobs well, we should be able to move more quickly and decisively than others to build important new companies in this fast-moving, paradigm-changing window of time.
Part B of this post goes into more depth about the opportunities around AI and the role that PSL hopes to play in this new area together with a new set of founders.
We appreciate the support of so many of you. Please come visit us in Pioneer Square!