This post is part of Business Insider’s ongoing series on Better Capitalism.
AOL cofounder Steve Case thinks we’re at the beginning of a new area of American entrepreneurship where the US coasts are less important than they used to be.
Case’s investment firm Revolution is putting $150 million toward startups in overlooked American cities through the Rise of the Rest Seed Fund.
Revolution has invested more than $1 billion outside of Silicon Valley.
A company that creates visibility systems for self-driving vehicles. An entrepreneur building high-tech greenhouses to cut distance from the produce supply chain. Sensors that drive energy savings by controlling air and heat in commercial buildings.
You might assume these efforts were born in a Palo Alto garage or a Cambridge classroom or a New York City co-working space. But you would be wrong. These three enterprises SEEVA in Seattle, WA; AppHarvest in Pikeville, KY; and 75F in Burnsville, MN, respectively represent what I believe is the future of innovation and what I have long called the Rise of the Rest.
My investment firm, Revolution, has always invested based on the notion that great companies can start and scale anywhere. But that wasn’t enough to move the needle. 75% of all venture capital dollars go to just three states CA, NY, and MA. So in 2014, we hopped on a bus to tour and draw attention to startup ecosystems across America.
33 cities and 8,000 miles later, we have learned quite a bit about the innovative spirit of this country and what it takes to create the entrepreneurial communities necessary to maintain America’s economic leadership.
What startup hubs need to thrive
For an entrepreneurial ecosystem to thrive, many things need to happen.
In Silicon Valley, you can’t turn a corner without bumping into someone who can refer an employee, connect you with a potential investor, or recommend a possible partner. That’s not the case in most other places. Cities need to find ways to create network density through things like incubators, accelerators, and co-working spaces.
Universities can play a critical role in connecting the entrepreneurial community and becoming a source of talent recruitment and retention. Many cities in the middle of the country also have long-established traditional businesses that can help founders.
They can provide much needed credibility to young firms by becoming customers or collaborators. And, of course, local and state governments have an enormous role to play by creating the policies and programs that incentivize and accelerate all of the above.
I believe that with all of these puzzle pieces in place, in cities like Detroit and Des Moines, we will start to see a more evenly dispersed innovation economy. But you don’t have to take my word for it. Last year, JD Vance and I launched Revolution’s newest fund, the Rise of the Rest Seed Fund, to back more startups between the coasts.
We were able to attract investments from iconic entrepreneurs such as Jeff Bezos, Tory Burch, and Howard Schultz; investors such as Henry Kravis, John Doerr, and Ted Leonsis, and executives such as Meg Whitman, Eric Schmidt, and Michael Bloomberg.
Some investors, particularly those based in Rise of the Rest cities, also recognized this opportunity years ago and have played an instrumental role in helping to build rising startup communities. These regional investors are critical, so the Rise of the Rest Seed Fund was created to be a partner in their efforts.
Backing promising companies
We’ll typically commit to 10% of a round, and then help form broader investor syndicates to back promising companies.
But this isn’t just about making investments. We are committed to building a community for investors to share best practices and learn from one another.
To do this, we are hosting our second annual Rise of the Rest Summit in DC this week, focused specifically on regional microfunds. For two days, fund representatives will share case studies, hear from some of the Rise of the Rest Seed Fund limited partners, meet with elected officials, and participate in working sessions.
I believe we are at the beginning of a new era for entrepreneurship. For a long time, if you were a recent graduate and wanted to be part of the innovation economy, you often felt compelled to head to the coasts, but these days that is not necessarily the case.
Cities across the country are ushering in this new age by encouraging startups and the jobs that come with them. We look forward to being a catalytic force, helping to accelerate this process alongside the regional investors who have long believed in the great entrepreneurs building companies in their own backyard.
There is a real change taking place in this country a recognition that there are strong business opportunities all across the country and an acknowledgement that we can make a real impact by pursuing them.