Midwest tech
technology.
“The value will come from marrying industry knowledge with technology,” said Olsen of Drive Capital. “There’s an arrogance in Silicon Valley that we don’t need industry expertise. That’s going to be less and less true in the future.”
But broadening the geography of innovation-fueled economic growth will require capital. Today, three-quarters of all venture capital invested in America goes to California, New York and Massachusetts, the National Venture Capital Association estimated. Ohio gets less than 1 percent and the 12-state Midwest region less than 10 percent in total, according to figures compiled by the State Science and Technology Institute.
“There are two Americas,” Case said. “One with an abundance of capital and opportunity — in Silicon Valley and pockets around the nation. But not in the other America, and that other America is most of the country.”
Case served on White House advisory councils on jobs, innovation and entrepreneurship during the Obama administration, and that experience, he said, shaped his thinking about investing in the middle of the country. Since 2011, his firm has raised more than $1 billion for two funds, Revolution Ventures and Revolution Growth, which generally make investments of $4 million to $50 million, including in startups in the Midwest.
Both Case and Vance, whose career path went through the Marines, Ohio State University and Yale Law School and then to a Silicon Valley venture firm, view building businesses as a social virtue as well.
Referring to the troubles chronicled in his book, Vance said that “at least a partial solution is to get more investment capital into this part of the country.”
The Kauffman Foundation, which studies startup activity, reported last month that Columbus ranked third among 40 metropolitan areas in “growth entrepreneurship,” the share of startups that employ 50 or more workers within 10 years.
CrossChx, a 5-year-old startup with a payroll of 80 people, is one of them. The company, which makes health care software, has raised $35 million of venture funding in three rounds. Drive Capital spotted the company, led the early financing and has since been joined by Bay Area investors including Khosla Ventures and Silicon Valley Bank.
In Ohio, that $35 million is the equivalent of $70 million in the Valley in terms of being able to hire talent and sustain operating costs, said Sean Lane, CrossChx’s co-founder and chief executive.
“I’m not sure we would have made it through the zigs and zags if we were in the Valley,” Lane said.
In Ohio, $35 million is the equivalent of $70 million in the Valley in terms of being able to hire talent and sustain operating costs.