(2017-12-05) From Bezos To Walton Big Investors Back Fund For Flyover Startups

The Rise of the Rest Seed Fund

On Monday, Revolution — the Washington-based venture capital firm lead by Steve Case — announced a new $150 million seed fund dedicated to investing in entrepreneurs living outside of the well-established startup hubs

the big value add of these investors is not the capital per se, but the expertise, relationships, and other resources they bring

what will be the impact on startup communities? First, success breeds success. To the extent these investments and investors can help individual companies succeed, particularly in places where that hasn’t happened before, it will energize, educate, capitalize, and elevate entrepreneurs in those communities over the long run, even those that are not directly supported. This is the most direct way that ROTR can have a lasting impact on communities broadly.

From Bezos to Walton, Big Investors Back Fund for ‘Flyover’ Start-Ups

When Steve Case, the billionaire co-founder of AOL, first met J. D. Vance, author of “Hillbilly Elegy,” the best-selling book about the industrial decline of the Midwest, Mr. Case told him, “I really love the book but there is a part of it I don’t love.” Mr. Vance listened patiently. “It helped frame the problem but it didn’t really offer up a solution,” Mr. Case told him.

It turns out that while they were publicly crisscrossing America, they were also privately holding meetings with some of the wealthiest individuals and families in the country, urging them to not only invest in a new fund but become partners with some of the companies that will benefit from it. On Tuesday, the fund, called Rise of the Rest, will disclose its investors

The fund, said Mr. Vance, was meant to construct an ecosystem like the one in Silicon Valley that will provide support and connections to entrepreneurs in small towns.

“We’re fans of impact investing,” he said. “But we actually didn’t position this as an impact fund. First and foremost, our goal was to generate top returns.”

only $150 million to start

Silicon Valley money isn’t enough to create new tech hubs

This year, other pledges to invest more in Heartland tech include Apple, which created a $1 billion fund in January to invest in advanced manufacturing startups in the U.S. There’s also Microsoft, which recently launched an initiative called Tech Spark, designed to “foster greater economic opportunity and job creation in six communities across the United States.”

How a tech hub gets made

The origin of modern-day Silicon Valley can be traced back to the creation of Fairchild Semiconductor in 1957.

Fairchild exemplified the sort of outcome that ecosystem builders in cities across the U.S. hope for. The idea isn’t simply that a company will go public or get acquired for upwards of $1 billion — it’s that once a company goes public or gets acquired, its employees will go on to create startups of their own or to invest in other startups.

for many entrepreneurial ecosystems, finding ways to help businesses scale has proved the most challenging.

Mark Muro, a senior fellow at the Brookings Institution, told VentureBeat in a phone interview that cities shouldn’t wait until they have a few startup successes to begin thinking about ways to bring in some of the additional resources entrepreneurs will need. He cited the low concentration of highly skilled digital workers in non-coastal cities as a concern. This is a problem that plagued some of the startups that moved to or opened offices in Las Vegas around 2013 to take advantage of Zappos CEO Tony Hsieh’s $350 million investment in the city.