Washington Companies Raised $36M in May, as Startups and VCs Adjust to Economic Climate

Xconomy Seattle — 

Things might be starting to turn around in the Seattle-area economy, but that doesn’t mean startups are raking in the dough. It’s becoming clear that, with the exception of maybe one or two big deals a month, venture funding for young companies in the Northwest has stabilized to a much lower level than we were seeing two or three years ago.

Last month, companies in Washington state raised a total of $36 million in seven venture financing deals. That’s the official tally from our partner CB Insights, a New York-based private company intelligence platform and information services firm. The stats don’t include financing deals worth less than $1 million, which are becoming increasingly prevalent, especially for seed-stage software startups (more on that below).

The May numbers are fairly consistent with the $30 million raised by seven companies in April (not counting the $315 million Liberty Dialysis deal), and are up a little over the $21 million raised by three companies in March. Four of the seven financings in May were Series A rounds, and the deals were fairly evenly distributed between Internet software, mobile, and healthcare companies.

The biggest deal of the month was a $12 million Series D funding round for Spring Wireless, a Brazilian telecommunications company that set up its North American headquarters in Seattle early last year. Other notable financings included healthcare startup Coronado Biosciences raising a $7 million Series A round, and advanced materials firm MicroGreen Polymers getting $6.9 million in Series B funding to accelerate its entry into the consumer market, where it will introduce products like recyclable coffee cups and packaging materials that use less plastic than conventional items.

Meanwhile, a couple of early-stage Internet startups exemplified the trend we’re seeing of software companies doing more with less money upfront. Off & Away, a hotel-auction travel site incubated by Madrona Venture Group, and SeniorHomes.com, a healthcare resource site for seniors led by CEO Chris Rodde, each raised a little over $1 million in first-round funding. And a number of companies raised smaller rounds that didn’t show up in the current stats (more on that in a separate story).

That, in fact, is becoming the modus operandi for most young software and tech companies: bootstrap or raise a small angel round, get some market traction and revenues, and try to raise more money after that. The angel and VC community has already been adjusting to this dynamic.

Here is the list of venture financings for Washington state companies in May:

Washington company financings for May 2010 (courtesy of CB Insights)