Investment in Oregon startups hit its highest point in nearly two decades during 2018. The state’s entrepreneurs pulled in more than $600 million — double the prior year’s haul.
The influx doesn’t reflect a resurgent startup scene, however. Rather, last year’s tally is an echo of an upsurge that took place a decade ago.
The biggest investment went to Portland product development specialist Jama Software, which sold the company for more than $200 million in a deal led by New York investment firm Insight Venture Partners. Jama isn’t a startup anymore — it was founded way back in 2007.
But its deal was the largest to date for an Oregon tech company from that era, which gave rise to a collection of upstart software and online services operations that helped reduce Silicon Forest’s dependence on the aging hardware manufacturing sector.
Jama’s sale cashed out employees and many of its early investors, while providing capital for future growth. Jama expects to expand to another floor of its downtown headquarters this year and said the funding could help it buy other companies to expand its business.
The 2018 tally also includes two private equity investments totaling nearly $170 million in Vacasa, a Portland vacation rental management company founded in 2009, and $50 million for Gresham veterinary services company VetSource, which formed in 2005.
Also landing big investments were Puppet ($42 million) and Urban Airship ($25 million), two other members of the Portland tech renaissance that began during the Great Recession.
Startups represent a tiny slice of Oregon’s economy, and the state hasn’t produced a large, homegrown tech company in decades. Employment and wage figures suggest the state’s technology sector, the hub for most startup activity, may have plateaued.
Startup investment is important nonetheless, though, because nearly all the money comes to Oregon from outside the state. Such funding helps seed the development of new businesses, even though, in Oregon, those companies almost never turn into big corporations.
Oregon startups more commonly operate in niche markets, and when they’re successful they often sell to larger companies that consolidate them into a broader corporation. On Monday, for example, onetime Portland startup standout Janrain sold to a Massachusetts online services company, Akamai Technologies.
Akamai said it plans to retain Janrain’s Portland office, which employs 92. Such deals have created a network of outposts, from Intel to eBay to Amazon, which employ the majority of Oregon tech workers.