Money Matters

A Bevy Of Billionaires Join Steve Case’s $150 Million ‘Rise Of The Rest’ Startup Fund

(Source: www.forbes.com)

Revolution

Steve Case’s Rise of the Rest campaign to promote entrepreneurship outside of Silicon Valley is getting its own fund.

Called the Rise of the Rest Seed Fund, the fund announced on Tuesday will invest $150 million in startups outside of tech’s usual stomping grounds and with the support of a group of three-dozen of America’s best-known business leaders including Jeff Bezos, Sara Blakely, and Howard Schultz.

Day-to-day management of the fund will fall to J.D. Vance, the Hillbilly Elegy author who joined Case’s investment firm Revolution in March 2017, joined by partner David Hall and Anna Mason, who has been directing Rise of the Rest investments in recent months. The team will look to make investments of less than $1 million alongside local partners, not leading rounds or taking board seats. “We hope we can be catalytic, in the visibility we can bring,” says Case.

For Case and Vance, the new fund is a natural evolution in expanding the Rise of the Rest network that had been in the works for a few months. Revolution set out to raise $100 million three months ago, but found itself over-subscribed with interest from Case’s friends and network that also includes investment titans such as Ray Dalio, Henry Kravis and Michael Milken, and business leaders such as Dan Gilbert, Sheila Johnson and Meg Whitman. “The first conversation we had was to collect a list of people we thought were iconic, highly visible entrepreneurs and investors to be involved,” says Vance. “First and foremost it’s a fund, but there’s a little bit of a movement, so we wanted individuals and not institutions. It’s a dream team of investors,” says Case.

“I felt it was a no brainer,” says Eric Schmidt, chairman of Google parent Alphabet. “Investing in this way is good for everyone: more jobs, more wealth, better products and it helps our society in dealing with a lot of jarring employment changes,” Schmidt wrote Forbes in an email. “Entrepreneurs, remember, are the job creators in our economy.”

Billionaire venture capitalists John Doerr and Jim Breyer both say they think the fund can generate competitive returns while introducing the Rise of the Rest fund’s investors to leaders outside of their own networks. “Many investors don’t look outside the coasts because we don’t have the networks to tap into there,” says Breyer. “Steve and his team have spent years building relationships to help curate deal flow.” Doerr, meanwhile, says that as an engineering student from St. Louis in the 1970s, he moved to California because it provided the best opportunities out of school. He hopes that can change. “I want this fund to create new opportunities for founders wherever they live,” Doerr wrote Forbes. “I don’t think of ‘the Valley’ as some zip code in California. It is a state of mind that can be anywhere, for everyone.”

For other backers of the fund like Tory Burch, the fund has civic appeal. “I see opportunity as an investor and as a citizen who cares about the future of our country,” Burch said by email. “By providing entrepreneurs outside of Silicon Valley with the resources they need to build great businesses, we are disrupting the current investment paradigm and creating a more evenly dispersed innovation economy, which is critical for the future of our country.”

Others signed up for the fund include Case’s partner Ted Leonsis, Sean Parker, Joe Mansueto, Romesh Wadwhani, Adebayo Ogunlesi, David Rubenstein, Byron Trott, Jeff Vinik, William M. Lewis, Jr. and members of powerful families on both sides of the political spectrum: Koch, Pritzker and Walton.

Case has been traveling the country promoting his Rise of the Rest efforts for the past four years, making six bus trips across 33 cities to meet with startups and invest. In the spring, he and Revolution hosted an event for entrepreneurs and investors from those cities in Washington, D.C., where his firm is based.

Revolution’s efforts will be tested in the strength of the startups that filter through to it from the relationships it’s developed in those growing, but smaller, tech hubs such as Denver, Nashville, Pittsburgh and Omaha. Because the fund will be looking to co-invest, Vance and Case are confident that local investors will welcome their efforts. “We’ll continue to build on those relationships and visit those ecosystems,” says Vance.

More Info: www.forbes.com

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