There’s a new Seattle-based investment firm looking to support software startups across the Pacific Northwest that are just getting off the ground.
Breakwater Ventures is coming out of stealth after launching last year. Founded by former investors at SeaChange, the pre-seed and seed firm has raised $10 million for its first fund and is already deploying cash.
“Not enough capital exists to satiate the needs of the companies that are rising in our ecosystem,” said William Finney, founding partner at Breakwater.
Finney was previously managing partner at SeaChange, another early stage Seattle-based investment firm that is no longer active. He co-founded Breakwater with Peter Mueller, former partner at SeaChange.
Lauren Olson, former director of fund management at SeaChange, is now in the same role at Breakwater.
“Peter, Lauren, and I made an intentional decision to move forward and start a new fund together to better serve the startup ecosystem,” Finney told GeekWire.
Finney said he’s still helping support SeaChange portfolio companies but that the focus is on building Breakwater into “a fund that meets the needs of startups today.”
Breakwater joins other newer firms such as Ascend and Unlock that are betting on nascent tech startups emerging from Seattle — one of the top hubs for engineering talent — and the Pacific Northwest. Out-of-town firms including Point72 are also eyeing the region for seed-stage investments.
Finney said he “sees a major gap in first check capital in the ecosystem.”
“I’ve personally been a part of raising capital for two startups in the early 2010s and now in venture for eight years in Seattle and I can tell you ‘we’ as an ecosystem can do a much better job,” he said.
Breakwater expects a majority of its portfolio to consist of Pacific Northwest companies but is also open to backing startups outside of the region.
The firm will invest across four sectors: data/AI, enterprise, fintech, and marketplaces. Average check size will range from $250,000 to $1 million.
It has backed biotech data software company SciSpot.io, and credit services startup Upwardli.
SeaChange operated with a “collaborative investor network” model, using group analysis with its angel investors. Breakwater won’t be doing that, Finney said.
“We found over time that highly selective engagement with LPs can add value,” he said. Finney added that the firm built a new post-investment engagement platform to help connect advisors and experts with its portfolio companies.
Breakwater raised funds from a mix of past SeaChange investors and new backers. Executives at Meta, Microsoft, and Oracle, as well as venture capital veterans are putting money behind Breakwater.
Susan Preston, former managing partner at SeaChange (previously known as Seattle Angel Fund) and a longtime Seattle-area investor, is not involved with Breakwater.
Seed-stage funding has been somewhat insulated by the broader venture capital slowdown, given that investors are making longer-term bets. Pre-seed and seed deal value hit a 13-quarter low in Q4 of last year in the U.S., but 2023 numbers still exceeded pre-pandemic figures on an annual basis, according to PitchBook.
“Many investors continue to express a bullish view on the pre-seed and seed stages because of an increase in founder quality,” PitchBook wrote in its latest Venture Monitor report. “Running a business is particularly challenging amid a capital shortage and heightened market volatility, and investors have been looking to back and support entrepreneurs with a differentiated vision, strong team composition, and founder-market fit through the journey.”
