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Northwest Washington state: Dead zone for tech startups?

Innovative entrepreneurs lack resources, need better startup ecosystem

Tidal Vision Technical Director Daniel Jackson looks Monday, March 25 at a sample of a chitosan-based product. The company is a green tech startup based in Bellingham. (Finn Wendt/Cascadia Daily News)
By Frank Catalano Business & Work Columnist

The latest independent ranking of top Pacific Northwest technology startups was an eye-catcher. Not for what was on it. But for the clear absence of any tech startup in Northwest Washington state.

Yet, at the same time, the economic development initiative Choose Whatcom, backed by the Port of Bellingham, Whatcom County and the City of Bellingham, touts the area as “a hotbed for tech startups.” Bellingham Angel Investors is planning a local pitch event. And Technology Alliance Group for Northwest Washington (TAG NW), based in Bellingham and serving Whatcom and Skagit counties, is reviving its Innovation Awards.

The apparent disparity may have less to do with disagreement than evolving definitions and, perhaps, unmet regional aspirations.

The Seattle-based technology news site GeekWire’s long-running GeekWire 200 regularly ranks startups on publicly available information. And in the Q1 2024 rankings, not a single tech startup — defined as a private company not owned by private equity, that’s less than 15 years old — appears in the triangle bordered by Marysville and Richmond and Victoria, British Columbia.

The more comprehensive GeekWire Startup List of more than 1,300 tech startups with headquarters in Washington, Oregon, Idaho and British Columbia also has no more than a handful of startups in Whatcom and Skagit counties (a couple with dead websites), flanked by huge tech startup clusters in the Vancouver, B.C. and Seattle metro areas. 

The challenge for Northwest Washington, based on interviews with more than a dozen organizations and startups, may be more of a fragmented environment for local entrepreneurs, one that has several missing pieces when it comes to startup climate and resources, and not that Northwest Washington state is completely a tech startup dead zone.

General resources are not enough

General startup resources are available. CJ Seitz, director of the Small Business Development Center at Western Washington University, itself part of a nationwide network of SBDCs partly funded by the U.S. Small Business Administration, said it serves about 500 businesses a year in Whatcom County. 

“In 2023, about 5 percent were technology companies,” said Seitz, though SDBC assists not just startups but also more established small businesses looking to scale or sell. The no-charge consulting provides “C-suite level advice available to your business pro-bono,” she said. “This is true of small businesses in any sector, technology included.”

And more-established tech companies clearly exist in Whatcom and Skagit counties, from Bible study software maker Faithlife to real estate sales platform Brivity


But these resources may not always be the right kind, or enough, for tech entrepreneurs. 

Northwest Innovation Resource Center Executive Director Diane Kamionka sits with maps and diagrams detailing proposed “innovation centers” for multiple counties March 22 in her Bellingham office. (Finn Wendt/Cascadia Daily News)

“There are entrepreneurs that are starting more traditional businesses, restaurants, accounting services, nail salons, and we think of them as entrepreneurs in a way,” said Diane Kamionka, executive director of the nonprofit Northwest Innovation Resource Center. “There are individuals that are inventors, have come up with something that’s totally new, and we call those innovative entrepreneurs.”

She said it’s the innovative entrepreneurs that may need special types of support.

“The people we help generally can’t get bank funding,” Kamionka said. “They don’t have a history that banks require. In many cases, they don’t even have a product. So we tend to focus more on venture or angel or individual investments.”

Bright tech, big city

The unique needs of tech startups tend to favor a more fully developed and coordinated startup ecosystem, like the ones that already exist in Seattle and Vancouver, several of those interviewed said, with easier access to investors, mentors and peers for networking. 

“Seattle is very close, relatively speaking for a young person and that’s where a lot of the cultural environment and things are. In Bellingham, you kind of have to hunt to find groups,” Kamionka said. “But if you’re in Seattle, you can go to five different startup groups every day of the week.”

“We suffer from being too close to Vancouver and Seattle,” she said. “It’s easier for people to just go there.”

Don Miller, a member of Bellingham Angel Investors, echoed the need for a more “cohesive ecosystem for startups and investors in Northwest Washington.” He said a lot of pieces are offered by different local business support entities, such as TAG NW and SBDC, but not a lot of connections.

“There is a lot of redundancy among these groups and not a lot of interaction amongst them,” Miller said. “Being an angel investor in BAI for the past five years, I haven’t seen any of these groups openly solicit us for investment or bring opportunities to us. There’s a disconnect between these groups and investors.”

“The startup ecosystem in Northwest Washington is small when compared to a large tech hub like Seattle,” said Gene Kishinevsky, another BAI member and Bellingham resident. “There are relatively few organizations and events, and almost no spaces for people to meet regularly.”

It’s a type of fragmentation that can stymie potential innovative entrepreneurs.

“It can be confusing because of the many different groups, a lot not knowing about each other, or each group only offering part of what the startup wants/needs,” Miller said. 

[ Read more: A Skagit startup casualty, and lesson ]

Other holes cited repeatedly by those interviewed included the lack of a major research university that could spin off technologies for commercialization, and no formal startup incubator or accelerator programs to help startups go from idea to investment.

The Washington Technology Industry Association, a Seattle-based trade group that described its tech company membership numbers in Whatcom and Skagit counties as “very thin,” has seen efforts in Northwest Washington vary over time, and also require time.  

“As far as what the ecosystem needs, my two cents is it needs a person or group of people with the bandwidth to bring the community together for consistent startup-focused events,” said Nick Ellingson, WTIA’s startup ambassador and director of products. “We are ready to support that with curriculum, mentors, speakers, etc., but it’s hard for us to come in with resources to an area where there isn’t someone locally already getting things started.” 

Beyond software tech

The lack of Northwest Washington startups on the current GeekWire 200 list may have an additional contributing factor: an evolving definition of “tech startup” that now goes well beyond traditional consumer or enterprise software technology.

Essentially, a generation of startups that don’t necessarily think of themselves as tech startups and may not consider being listed or ranked. 

“You’re not building a plane or even an agricultural device without using some sort of technology nowadays,” NWIRC’s Kamionka said. “And I think our area is full of really innovative individuals that we should try to really help that have technology that enables equipment or products in our industries,” including agriculture, maritime, energy and clean technology applications. 

One of the higher-profile startups is FarmHQ, formerly CODA Farm Technologies, founded in 2020 at Wallace Farms in Burlington. The company, which automates farm irrigation through a combination of smart hardware and software, confirmed reports that it’ll soon pursue raising a Series A round of venture capital and said it has devices on customer farms in more than 30 states and provinces in the U.S., Canada and Mexico.

Quality Department Manager Ashlie Simmons does quality control for a Tidal Vision product. (Finn Wendt/Cascadia Daily News)

Tidal Vision is another example. Founded in 2015 and now filling a 52,000-square-foot facility in Bellingham, the startup with nearly 190 employees falls into the “green tech” category — taking waste crab shells from fisheries and extracting chitosan, a biomolecule with applications as an industrial biopolymer for use in water treatment, agriculture and material science industries, including textiles.

“I don’t believe this area is lacking much for our type of industrial biotech/cleantech/climate tech business,” said Craig Kasberg, Tidal Vision’s CEO. “There’s lots of industrially zoned commercial real estate, and at a reasonable cost. Energy is largely renewable and low cost.”

Kasberg credits NWIRC with helping make introductions to investors, advisors and brokers, among others. 

A second non-software tech startup that’s worked with NWIRC is Astraeus Ocean Systems. While also based in Bellingham, it’s at a much earlier stage. Founder Alex Parker said his company, founded in 2022 and with zero formal employees, eventually plans to have a network of “autonomous surface vehicles” providing low-cost ocean data collection technology.

“From my perspective, it feels like Bellingham has a lot of as-yet-unrealized potential for hosting a thriving tech startup ecosystem,” Parker said. But first, he said, it makes sense to work backward from what kind of tech startups make sense in the area, including climate and conservation technologies, and their needs.

“Many involve hardware development, lab work or field work; affordable access to physical spaces for this kind of work is limited,” Parker said. “I can easily secure access to a desk in a co-working space, but waitlists for low-cost shop space are years long.”

Astraeus, Parker said, plans to continue collaborating with NWIRC “on several projects to bring more regional investment and workforce development at the intersection of climate, maritime and space technologies.”

Tidal Vision’s Alex Gaynor scoops chitosan — extracted from waste crab shells — from a tote. The startup uses chitosan to make products for various industrial applications. (Finn Wendt/Cascadia Daily News)

Filling the gaps, raising the profile

Even without an obvious hub to connect the resource spokes, several area organizations have plans to spur and support startup activity.

Perhaps the most ambitious belongs to NWIRC. Kamionka said the nonprofit is building a network of “innovation centers” with services for entrepreneurs including advice, incubator space, introduction to funding sources and access to prototyping resources. 

She anticipates one in Skagit County, on the grounds of the SWIFT Center in Sedro-Woolley (formerly the Northern State Hospital campus), will open in early 2025. Another, for Snohomish County, is expected to open near the Arlington airport at the Cascade Industrial Center in mid-2025. 

At this time none is planned for Whatcom County, as Kamionka said to date, the county hasn’t wanted a physical campus that caters to innovative startups. A spokesperson for the Port of Bellingham confirmed it’s focused on the many other economic development resources in Whatcom County for tech startups rather than a new innovation center.

But other efforts in the county are underway this year. TAG NW’s Tech Innovation Awards, which the organization said were last presented pre-pandemic, will again be held in May. Bellingham Angel Investors is scheduled to hold a startup pitch contest for Whatcom and Skagit counties in early November at Whatcom Community College.

Overall, even if Northwest Washington never becomes a typical tech hub, CEO John Sternlicht of the Economic Development Alliance of Skagit County would like to see more tech startups in the region. 

“I’m having a hard time thinking of a downside,” Sternlicht said. “They are a way to build generational wealth like any other entrepreneur, ultimately create jobs … so yeah, we would love to have more tech startups.”


National rankings on tech, economy

The recent “Best-Performing Cities 2024” report from Milken Institute on economic performance, in ranking Bellingham 12th overall among small U.S. cities, also ranked it 47th (“relatively high,” according to a report co-author) for what it calls high-tech concentration. The same report ranked Bellingham lower in one-year high-tech growth, at 87. 

“That means it has a well-established high-tech sector, but relatively slower growth due possibly to a plateauing in the high-tech expansion,” said lead author Maggie Switek. 

By comparison, the Milken report ranked the Mount Vernon-Anacortes area 76th overall out of its listed 203 small metropolitan areas, and notably lower than Bellingham for high-tech concentration, at 131, and one-year high-tech growth, at 135. 

The annual report from the nonprofit, nonpartisan think tank only included the Bellingham and Mount Vernon-Anacortes areas in Northwest Washington state. Technology factors accounted for five of the 13 components measured. 

Frank Catalano is CDN’s business & work columnist; reach him at frankcatalano@cascadiadaily.com.

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