Forging Relationships in the Pacific Northwest: Q&A With Sam Teden, Director of Business Development
Welcome to the Frontier Capital team. What made you accept the offer at Frontier?
Sam: I was drawn to the culture our managing partners have fostered, which is grounded in a relationship-based approach. A friend of mine started working here before I was hired, and he made a comment that stuck with me: “We treat deals like people doing business with people. Doing it the right way really matters to us.” That resonated, because I’ve always expanded my professional network through meaningful relationship-building.
What is your role at Frontier, and which geographic markets will you cover?
Sam: In my role at Frontier I combine my passions for building relationships and discovering new innovative technologies to identify high-growth software and tech-enabled services companies that align with our investment criteria. I enjoy building relationships with a variety of intermediaries that share our focus and general mentality. To be effective in my role, I spend about 20 percent of my time in the Southeast, and the rest in the Pacific Northwest traveling the Cascadia Corridor of Seattle, Portland and Vancouver, BC.
Frontier’s investment focus is exclusively on software and tech-enabled business services companies. Why should Frontier be focusing on the Pacific Northwest?
Sam: For almost 20 years, Frontier has focused on investing in high-growth software businesses located outside of the major tech centers in cities such as Chicago, Dallas, Pheonix, Salt Lake City, and Atlanta, for example. Knowledge workers located in these markets can achieve a high quality of life but generally lack access to the venture and growth capital required to fuel the entrepreneurial tech ecosystem. We have found that these markets tend to produce more disciplined management teams that build companies with solid underlying business fundamentals than you may find in the major tech or financial centers. Without readily accessible capital, management must be disciplined and resourceful not only to survive, but to thrive.
The Pacific Northwest has also attracted the attention of some of the country’s largest tech companies. Many of those larger tech employers have served as a breeding ground for technology spinouts in the region.
Frontier recently completed the acquisition of Agreement Express Inc., a Vancouver, BC SaaS-based digital onboarding platform in the financial services industry. Can you speak to this acquisition and how Agreement Express fits into Frontier’s strategy for the Pacific Northwest?
Sam: Agreement Express is a high-growth vertical SaaS company, with a niche technology platform, and strong client-base and culture, ready for its next phase of growth. This profile aligns perfectly with Frontier’s focus.
Beyond Agreement Express’s innovative technology platform and relationship-based culture, the company is well positioned to take advantage of the digital transformation within the financial services industry. Agreement Express is a great example of the many promising technology companies in the Cascadia that we are either tracking or look forward to connecting with in the near future.
How would you characterize the investment ecosystem within those markets? And how does the region’s recent M&A activity compare to the rest of the U.S.?
Sam: Seattle and Portland have several well-established earlier stage venture capital firms. For instance, Seattle-based Madrona Venture Group was an early Amazon investor. And as a side note, they've proposed that the stretch of Interstate 5 between Seattle and Vancouver should be devoted to autonomous vehicles.
Early-stage firms can provide the capital required to get businesses launched and to help land initial customers - these are great partners for Frontier as we can refer opportunities to them and potentially help when their portfolio companies are ready for a partner to help them pursue their next phase of growth.
The Pacific Northwest is ripe with entrepreneurial activity, but that’s not reflected in investment figures. One report last year said although Seattle is the size of Boston, its venture capital investments are a just a fraction of what Boston receives. Since 2010, Seattle based VCs have invested $8.4 billion versus $30.7 billion by Boston based VCs.
Given the size and stage of investments Frontier targets, do you envision there being ample companies to pursue?
Sam: When we see a relatively low amount of venture capital invested in such a vibrant, large community, that spells opportunity. I think you're going to see a continued uptick in deals for those regions, because California entrepreneurs are realizing, "My operational costs are pretty high. How can I limit that?” You do that by going to a place that has lower labor costs and huge tech companies where you can poach extremely talented engineers. As those entrepreneurs move to the Pacific Northwest, I think the venture dollars are going to follow.
Why are you excited about the Pacific Northwest and what opportunities do you foresee for Frontier?
Sam: We’ve closed two investments in the Pacific Northwest in the last 12 months, and I think that’s just the start. Our approach to deals - the focus on people - is well-matched with the region. You’ve got to spend some time in these cities for people to trust you. They're almost sick of people coming in, investing, and then leaving. When you show true interest, they accept you. There are extremely generous people in those areas who want relationships where everyone succeeds.