INSUBCONTINENT EXCLUSIVE:
Most of the venture capital firms covered in TechCrunch and other tech publications compete for a spot on the cap table of the hottest Bay
Area, New York or Los Angeles companies of the moment
Few seek out companies in Indianapolis, Milwaukee or Tampa.AOL co-founder and former chief executive officer Steve Case’s venture capital
fund, Revolution, deploys capital to companies “outside of the hotbeds.” Revolution, the parent company of Revolution Ventures, the Rise
of the Rest Seed Fund and Revolution Growth, has evangelized its approach to backing companies in emerging markets, helping promote
entrepreneurialism in geographies often overlooked by Silicon Valley’s Patagonia vest-wearing venture capitalists.Revolution Ventures
managing partner Tige Savage.“When we started doing this, it was heretical,” Revolution co-founder Tige Savage tells TechCrunch
“People who were investors thought, ‘Why would you do this? It’s not where the talent is
It’s a flawed strategy.’ Well, nobody says that anymore
Lots of firms are now talking about this pretty actively.”Today, Washington, DC-based Revolution is announcing its latest fund
Revolution Ventures, its Series A and Series B-focused outfit, has raised a $215 million third fund, almost precisely the size of
Revolution Ventures I and II, which each closed on $200 million
The firm’s portfolio includes Detroit’s direct-to-consumer plant startup Bloomscape, Chicago-based Paro, which provides a network of
on-demand finance professionals, DC’s custom framing business Framebridge, Milwaukee-based monthly wine club Bright Cellars and New York
insurtech company Policygenius.Since Revolution launched in 2005, venture capital activity in underrepresented markets has grown
Utah’s Salt Lake City and Provo have garnered a reputation for churning out great tech businesses, earning it the nickname Silicon Slopes
Austin and Denver have emerged as VC hubs, rapidly becoming formidable opponents to Silicon Valley’s upstarts.
Historically there’s
been a reluctance to get on an airplane for that $3 million to $5 million check. - Revolution Ventures managing partner David GoldenVC
firms like NEA, which invests in companies across industries and stages, has made a concerted effort to tap into the Atlanta startup
ecosystem, another market that has seen considerable growth thanks to the corporations headquartered there and the network of universities
producing top-notch engineers.“We look at areas that have one legacy industry in the region, where some Fortune 500 companies have
established career opportunities to retain talent, where there is a supportive angel and seed network to get folks going and where the costs
to scale a company are more reasonable,” Clara Sieg, a partner at Revolution Ventures, tells TechCrunch
Sieg recently joined us on Equity, TechCrunch’s venture capital podcast, to explain the firm’s “rise of the rest”
philosophy.Competition for access to deals in the Bay Area, however, has priced many investors out of the most sought-after rounds
This has encouraged many VCs, who perhaps don’t have access to a seemingly endless pool of capital, to search elsewhere for potential
“unicorns.”“Historically there’s been a reluctance to get on an airplane for that $3 million to $5 million check, but once the
company is seasoned and they are getting ready for that Series B or Series C, that’s worth getting on an airplane for,” Revolution
Ventures managing partner David Golden tells TechCrunch
“We see more activity there from the traditional East Coast and West Coast firms.”
We looked back and realized we drove the greatest
returns in these off the beaten path geographies. - Revolution co-founder Tige SavageAs for Revolution’s competition, Golden says
that tends to come from within the local ecosystem in a given city: “I think that’s likely to change in the years ahead thanks to the
work that Revolution and Steve Case have done to shine a light on areas outside the hotbeds,” he adds.Revolution began nearly 15 years
ago as Steve Case’s balance sheet fund, in essence
Quickly realizing the untapped opportunity to reap big returns by investing in second and third-tier markets, co-founders Savage, Case and
Donn Davis formalized the strategy
Ultimately, the team built three firms under the Revolution umbrella, allowing them to invest across all stages.“We were not seated in
Sand Hill Road so we knew we would have to get on airplanes,” Savage said
“Then we looked back and realized we drove the greatest returns in these off the beaten path geographies.”
