Venture Cycles and Hard Lessons with Matt McIlwain (Madrona)

Driving Alpha

Matt McIlwain, Managing Director at Madrona, has spent over two decades investing in intelligent applications and driving innovation in AI. With a track record including Smartsheet, Apptio, and Isilon, he brings rare perspective from 25 years in venture capital.

Here’s a glimpse of what you’ll learn:

• 00:43 Introduction to Driving Alpha Podcast

• 00:57 Guest Introduction: Matt McElwain from Madrona

• 01:41 Matt's Journey into Venture Capital

• 03:06 Early Years at Madrona and the Dot-Com Bust

• 04:45 Madrona's Investment Strategies and Success Stories

• 06:29 Driving Alpha for Portfolio Companies

• 09:34 Evaluating Founders: The Power of Why

• 24:49 Navigating Exits and M&A Landscape

• 28:25 Life Lessons and Long-Term Perspective

• 32:40 Conclusion and Future Outlook

In this episode

Matt recounts his unconventional entry into venture capital—from auto parts to Amazon-era Seattle—and how he joined Madrona just before the dot-com crash. He reflects on the firm’s resilience through market downturns, the evolution of their early-stage to acceleration-stage investment strategy, and how conviction-driven bets like Isilon and Smartsheet became fund-makers despite difficult timing.

Matt breaks down his “power of why” framework for evaluating startups, emphasizing founder-market fit and the value of long-term thinking. He shares candid insights into Madrona’s hands-on approach with founders, how he spots extraordinary teams, and why curiosity is the ultimate trait in successful entrepreneurs. From navigating exits in today’s M&A climate to building enduring partnerships, this conversation is a masterclass in venture capital longevity.