Matt McIlwain on M&A, Welcome Investor Anna Chen, NVIDIA Acquires OctoAI, Final IA Summit Agenda Released

What a week for innovative companies in Seattle — OctoAI unveiled its acquisition by NVIDIA, Observe announced its $145 million raise, and Smartsheet, a former Madrona portfolio company that we partnered with from Day One until they went public in 2018, announced it is going private in a buyout worth $8.4 billion. We also welcomed Investor Anna Chen to our Bay Area office, finalized the agenda for tomorrow's IA Summit here in Seattle, and Matt McIlwain joined CNBC Friday to talk intelligent applications and M&A. From the portfolio: Typeface and Statsig were named 2024 Top Startups by LinkedIn, Spotnana named Mark Nelson to its board, Gradial partnered with AWS and Adobe, and so much more.

Madrona News

Matt McIlwain on CNBC: "OpenAI has a lot of challengers"

Madrona Managing Director Matt McIlwain joined CNBC 's Brian Sullivan last Friday — ahead of tomorrow's 3rd annual #IASummit, which celebrates innovative startups and the big tech leaders setting agendas. Here are some of the themes Matt covered, some of which we'll be diving into at the Summit tomorrow.

• OpenAI – Everyone is focused on the people drama, what we are paying attention to is its ability to execute on some compelling themes, including the important step of transitioning from generative to reasoning and honing its business model. ChatGPT is by all accounts the lion’s share of their revenue – is that sustainable? 
• Startups are building quickly – Our #IA40 list has a handful of larger companies that have won multiple times (OpenAI, Anthropic, Runway), but there is huge turnover in this list every year, showing the incredible innovation happening in AI. IA40 winners like Hugging Face, Runway, Writer, Glean, Read AI, and others are generating strong market momentum at the application (vs. model) layer!
• PE buyers are out looking and buying — There has been strong growth in PE deals as interest rates drop and the economy stabilizes (as opposed to strategic, which are hampered by regulatory concerns). Matt's assumption is that PE transactions will accelerate in Q4 and into 2025! (Madrona portfolio company Smartsheet last week announced a deal to go public for $8.6 million with Blackstone and Vista leading — and read more about Smartsheet's go-private from Matt here.)

Watch the whole CNBC discussion here.

Welcome Investor Anna Chen

We are thrilled to welcome Anna Chen to Madrona as an investor based in our Palo Alto office. She will focus on companies in the early growth and acceleration stages.

Anna brings a wealth of experience and expertise to Madrona and bolsters our growing presence in the Bay Area. She spent two years on the technology investment team at General Atlantic in New York, focusing on consumer subscription, marketplace, and SaaS businesses. Anna helped lead GA’s investments in industry-leading companies like Flo Health, and she supported portfolio companies, including Chess.com, Pendo, and others.

You can reach Anna by email at anna@madrona.com and read more about Anna here.

NVIDIA Acquires OctoAI

Last week, NVIDIA announced it acquired Madrona portfolio company OctoAI (Acquired by NVIDIA) . Luis Ceze , Jared Roesch , Tianqi Chen , Jason Knight , Thierry Moreau , and Carlos Guestrin were all involved in the research and insights that helped create the TVM open-source technology at the University of Washington computer science school and then the creation of OctoAI back in 2019 to drive commercial impact with this technology. We're honored to have partnered with these fantastic founders since Day 1 (minus 1, really)!

"From sorting out the terms of the original "pre-seed" round to helping AWS understand the dynamics around the open-source movement in applied AI to learning our way into product-market fit with the BEST inference optimization service available (OctoAI can help customers find their optimal fit of performance, customization, and cost), OctoAI has been the best!" — Managing Director Matt McIlwain .

You can see Matt's full comments on LinkedIn here - and read more about the acquisition in GeekWire.

Final IA Summit Agenda and New Speakers

As we approach the final countdown to tomorrow's IA Summit, we're thrilled to share the final agenda! New speakers include NVIDIA VP of Enterprise AI & Automation Rama Akkiraju , The Wall Street Journal Reporter Tom Dotan , and executives from three more of our IA40 Winners: Writer , Anduril Industries , and CoreWeave . With ten winning companies set to take the stage, attendees will get a view into the hottest AI startups and the customer problems they are tackling in entirely new ways. This event promises to be an incredible gathering of the brightest minds from around the country — we can't wait to connect in Seattle, share insights, and explore what's in store for the future!

You can see the full agenda on the event website, and be sure to subscribe to Madrona's YouTube channel to catch the session recordings.

Observe Closes $145M Series B and S. Somasegar Joins the Board

Observe, Inc. announced the close of its $145M Series B funding round last week, which Madrona participated in as an existing investor. With this round, Managing Director S. Somasegar also joined the company's board of directors.

"We at Madrona are thrilled to double down on our investment at Observe with this new tranche of funding and glad to be even more involved with the company." — Soma Somasegar shared on LinkedIn.

With this announcement, Observe also launched "Project Voyager," its most significant product update yet. Voyager introduces an AI Investigator along with OpenTelemetry-Native APM and Snowflake Observability, enabling Engineering, DevOps, and SRE teams to troubleshoot incidents faster and improve customer experience. Learn more in the SF Business Times (paywall).

Portfolio Roundup

Spotnana named Madrona Venture Partner Mark Nelson to its board of directors.

Gradial partnered with AWS and Adobe to accelerate content migration and operations on Adobe Cloud.

Typeface and Statsig were named Top Startups for 2024 by LinkedIn.

Flexe named Pirasenna Thiyagarajan chief technology and product officer.

Cohesity Head of Global Cyber Resilience Strategy James Black joined the CyberDaily Podcast. Global Director of Technical Education & Enablement Mark Baugher landed on CRN’s list of the top 100 People You Don’t Know But Should in 2024.

Pulumi announced a Visual Studio Code Extension to manage any cloud project.

Tesorio CEO Carlos Vega posted his latest Forbes Financial Council article about the cash flow disconnect.