Steve Case is trying to make money with founders outside Silicon Valley; his plan is starting to work • TechCrunch

Steve Case, the co-founder of America Online, investment firm Revolution and its seed-stage spin-off Rise of the Rest, has released a new book Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream. In it, Case argues that Covid has been a “shake the globe” moment for entrepreneurship and that power will never again reign as it once did in cities like San Francisco, New York and Boston.

We spoke to Case today about the book; We also chatted to him about the mentality of coastal investors, whether he has any political ambitions, and the status of his relationship with JD Vance, the Ohio Senate nominee who once worked closely with Case (they performed together at our TechCrunch disrupt event in on 2018).

Case also addressed a number of his bets, which, perhaps to the surprise of skeptics, have gained momentum since he began investing across the country. In that regard, he suggested that one important piece of advice he tries to convey when speaking to founders is the art of storytelling itself. (A compelling narrative can go a long way, especially when you’re out of sight of some of the country’s most powerful investors.)

More of our conversation follows. These excerpts have been edited for length and clarity. (You can hear the longer conversation here.)

TC: You were on a mission going back to 2014 to bring more awareness to founders across the country by traveling approximately 11,000 miles through 33 cities. As Covid fades are you back on the road now or have you booked this chapter?

SC: It [that national tour] came out of some effort a little over 10 years ago; I was asked by President Obama to chair an initiative called the Startup America Partnership. And that made me focus on regional entrepreneurship and that imbalance that we talked about before, in terms of 75% of venture capital dollars [were] go to only three states. And the more cities we visited, the more cities we wanted to visit. We obviously had to stop when the pandemic hit and we haven’t restarted yet in terms of physical tours. But we spend a lot of time traveling around the country. The Rise of the Rest team, which now numbers about a dozen people, has visited dozens of cities over the past six months.

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Chris Olsen of Drive Capital in Columbus, Ohio, told us a few weeks ago that while his firm had laid the groundwork for more VCs to come to the area, the opposite has happened post-Covid, with them retreating to the shores to have. do you see the same

[I think] As some settle into a tougher environment and focus more on their existing investments, I believe we have reached a tipping point during the pandemic and that will result in more capital flowing faster to more cities and more entrepreneurs in those cities .

Most people in most parts of the country felt that if they wanted to be part of the innovation economy they had to leave where they should go to shore. That started to slow over the past five years and picked up in terms of people moving during the pandemic. [which] In the end it was a snow globe shaking moment for society and also for many families. They’ve kind of reassessed how they want to live and work and where they want to live and work, and that’s likely to create a lasting dynamic.

Where has Rise of the Rest invested the most dollars?

We’ve made 200 investments in 100 different cities through our trips, so it’s pretty broad. And we see a dynamic in many, many cities. Indianapolis is an example of a city most people don’t really know what’s going on [and one of the reasons is a] Tentpole Company, which is ExactTarget. It has been acquired [in 2013] from Salesforce for $2.5 billion and had 1,000 employees at the time. Now Salesforce has 2000 employees in Annapolis and [it’s] the second largest Salesforce office outside of San Francisco, and the founder of that company and many of that company’s early employees went on to found new companies.

We’ve also seen interest in places like Richmond, Virginia; We supported a company called TemperPack that focuses on sustainable packaging. They actually started out in New York City, but decided to move to Richmond to expand their manufacturing capabilities, and they raised $140 million in a Goldman Sachs-led round. We have supported [online farmland investment company] AcreTrader, whose founder Carter Malloy lived in San Francisco, decided to move to Arkansas to get as close as possible to the farmers. We have invested in a company called Freightwaves in Chattanooga, focused on building a Bloomberg data platform for the freight forwarding and logistics industry.

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Were there departures?

One of our seed companies, [Kentucky-based] AppHarvest went public about a year ago [via a SPAC]. FiscalNote, another DC-area-based company, last went public about a year ago [via SPAC]. There’s another Kansas City company called Backlotcars that was acquired by a pretty big exit company.

I think we’ve seen [the portfolio] I’ve achieved seven unicorns so far, so it really bodes well for what’s happening in those places.

How to do business with you?

For the Rise of the Rest fund, we have invested with over 300 different regional venture capitalists. They lead the rounds [and] they take the board seat because we invested so quickly. Rather, we play a role in connecting these entrepreneurs and investors to essentially build a Rise of the Rest network.

Do you finance these venture companies as a limited partner?

We did some of that early on, but because we’ve now co-invested with over 300 of them, we received a lot of requests to be investors in these funds and we decided to step away from it because we wanted to build the largest possible Network.

At the same time as people are returning to their hometowns or other more affordable places, the political landscape is changing in dramatic ways that will surely put some off. Abortion bans are so divisive.

In the past, cities competed to get businesses to relocate. Now they compete to get people to move. And everyone will have different criteria that they prioritize. Maybe they’re moving for family reasons, or for livelihood reasons, or because there’s industry expertise in an area you want to build on, or [it could tie to] Lifestyle choices like cycling or skiing. In some states, taxes make it more attractive.

I think people will consider some of these social issues, including the recent Dobbs ruling, and take a step back, and I think the people making these decisions – whether they’re local and state leaders or others in the community, even the media – should think about it and be aware of it [of this issue]. I think we want to avoid excessive partisanship in the country. We have enough problems dividing the country; We want to avoid a kind of entrepreneurial culture war.

As someone who has run an international company and has probably been under political pressure yourself, do you think that companies should take a stand on social issues?

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I think every CEO has to decide, and some [of that] depends on what issues they want to get involved with and what issues they feel are most important to their key constituents, be it their employees or their customers or others. but [some of why people move to certain places will tie] to what the mayors and governors and politicians are doing. But some of it will also be what entrepreneurs and big company CEOs choose to do.

I’m curious about your relationship with JD Vance. He initially managed the Rise of the Rest fund. What is your current relationship with him and what do you think of some of the positions he has taken?

JD probably came to us four or five years ago right after he came out with that Backwoods Elegy Book. One of the reasons is that his wife, Usha, was scheduled to work there for a year as a clerk at the Supreme Court in Washington, DC, and we are headquartered in Washington, DC. So he really helped launch the first Rise of the Rest fund. But after being in DC for a year, they decided to move to Ohio and he stayed in a role for about another six months but eventually decided to start his own fund, which he did in Cincinnati.

I haven’t spoken to him since he announced last year that he was running for the Senate, and I have not endorsed that campaign. To be honest, I was surprised by some of the things he said that, by his own admission, are inconsistent with some of the positions he took several years ago.

Do she Ambitions to become a politician? You’ve got that beloved CEO thing going for you

I appreciate you saying that, but I think I’ve also had success in politics, including working on the JOBS Act – the Jumpstart Our Business Startups Act – and more recently some of the work around the region Hubs is because I’m not political. When we travel, we invite Democrats and Republicans to join us on the bus, and everything we do seeks to make innovation, entrepreneurship, startups, and job creation a bipartisan issue.

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