Home Startups Steve Case's Rise of the Rest fund makes first investments, adds investors Reid Hoffman, Megan Smith

Steve Case's Rise of the Rest fund makes first investments, adds investors Reid Hoffman, Megan Smith

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Steve Case-led venture capital firm Revolution continues to advance its Rise of the Rest seed fund, announcing nine of the fund’s first investments and adding more big names as investors, including prominent entrepreneurs Michael Bloomberg and Reid Hoffman.

The moves come just two months after Case announced the $150 million seed fund, which aims to invest in startups outside of Silicon Valley, New York, and Boston. The fund’s limited partners already include an array of notable Silicon Valley investors and other tech executives.

The first batch of investments sheds more light on just how Case and his team plan to contribute as what they call “catalytic capital.”

The nine startups are:

  • AppHarvest (Pikeville, Kentucky)
  • Catalyte (Baltimore, Maryland)
  • Cotopaxi (Salt Lake City, Utah) 
  • EngageTalent (Charleston, South Carolina)
  • Losant (Cincinnati, Ohio)
  • SafeChain Inc. (Columbus, Ohio)
  • ZenBusiness (Austin, Texas)
  • Zylo (Indianapolis, Indiana)
  • Seeva (Seattle, Washington)

Revolution announced Tuesday that Megan Smith, a former CTO of the United States, would also join Bloomberg, founder of the giant media company, and LinkedIn founder Hoffman as new investors of the seed fund. Together with the existing investors, which include names like Amazon’s Jeff Bezos, the new investors make Rise of the Rest one of the highest-profile investment funds in the country.

The nine startups represent a wide variety of sectors, from A.I. to SaaS to blockchain. Additionally, as Case stated when the fund was first announced, Rise of the Rest is not serving as the lead investor on any of the rounds — rather, Case says the fund’s main purpose is to connect startups with investors in other parts of the country, and vice versa.


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“Some of the benefits in places like Silicon Valley is the network density that doesn’t exist to the same degree in other parts of the country,” Case told VentureBeat in a phone interview.

A number of the startups in this batch are ones that Case and his team met during four years’ worth of Rise of the Rest tours across the country. Joe Hanna, founder and CEO of AI-powered recruiting platform EngageTalent, first met Case and his team when they visited Charleston in 2015.

Hanna told VentureBeat that Rise of the Rest also connected him with two of the other venture capital funds participating in EngageTalent’s $3 million funding round: Refinery Ventures in Ohio, and Grand Ventures in Michigan. IoT enterprise startup Losant, meanwhile, got connected to Rise of the Rest through managing partner J.D. Vance, who works out of Columbus, Ohio.

However, the idea is that Rise of the Rest won’t always make all of the connections directly, and regional venture capitalists will also connect the fund to potential investments. Diane Lansinger, cofounder of mobility startup Seeva, told VentureBeat that another one of the company’s investors connected them to Revolution.

“I’m a former recruiter, so I’m always thinking about the team that I’m pulling together,” Lansinger told VentureBeat. “I got up to the Revolution VC website and was looking more into the Rise of the Rest fund and the size of it … and I thought ‘Well, this is an amazing group of brains to have behind us and have their networks behind us’.”

The remaining question is whether Case and his team have built a strong enough network — for all of its name recognition — to result in good returns, and in the wide variety of sectors that Rise of the Rest is targeting. Since Rise of the Rest won’t be leading the rounds or taking a board seat on the company, in a sense the firm is betting not just on startups, but also on collecting the right set of regional venture capitalists.

“The whole approach — including having a bench of big investors in the wings to potentially sustain further growth — has the benefit of placing a dedicated and knowledgeable team in the middle of the information flow and dealmaking in these regions,” Mark Muro, a senior fellow at the Brookings Institution, told VentureBeat in an email.

In order to deepen that big bench of investors, more Silicon Valley firms will have to “get off the sidelines,” as Case put it. Case told VentureBeat that more Silicon Valley investors have expressed interest in backing companies in Rise of the Rest’s target cities since the $150 million seed fund was announced, but there’s still more work to be done. Hanna, for example, told VentureBeat that EngageTalent had some advanced discussions with Silicon Valley, Boston, and New York firms who passed on investing in the company because they were still skeptical about investing in a startup based in Charleston.

Bessemer Ventures is one of the most notable Menlo Park firms investing in this first crop of startups, having lead Zylo’s $9.3 million series A, which was announced several weeks ago.

Case said that while he’s “bullish” on Silicon Valley, he thinks the hard-charging culture there will end up pushing more investors to look to startups elsewhere.

“Silicon Valley has become more of a free agent, almost mercenary culture, where people don’t typically stay at one company for very long. It makes it hard to build durable, sustainable, companies,” Case said.

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