By Anna Hensel for VentureBeat
Steve Case — cofounder of AOL and creator of the Rise of the Rest tours, which highlight startup activity in places outside of Silicon Valley — has secured $150 million for a new venture capital fund. He has procured backing from some big names in the Valley for the fund, which is also called Rise of the Rest and which will invest in startups in traditionally overlooked markets in the U.S.
The New York Times reported the news Monday evening. The fund’s investors include Amazon’s Jeff Bezos, Alphabet’s Eric Schmidt, Starbucks’ Howard Schultz, Spanx’s Sara Blakely, former Facebook president Sean Parker, KPCB Partner John Doerr, and Dan Gilbert, the cofounder of Quicken Loans.
Case has made investing in startups in underserved markets his mission for the past several years. Since 2014, his Rise of the Rest bus tours have visited entrepreneurs and investors in 33 cities. He has hosted a pitch competition in each of these destinations, giving startups the chance to win a $100,000 investment. Case is also the chairman and CEO of Revolution, a separate venture capital firm that aims to become the “premier firm outside of Silicon Valley.”
While a number of Silicon Valley CEOs, ranging from Mark Zuckerberg to Tim Cook, have given interviews in recent months about the importance of connecting with consumers and businesses outside of Silicon Valley, the formation of this fund is just one in a series of many steps that will be needed to close the venture capital gap between Silicon Valley and the rest of the country. Currently, more than 75 percent of all venture capital money in the U.S. goes to just three states: California, New York, and Massachusetts.
“I felt it [investing in companies outside of Silicon Valley] was a no-brainer,” Schmidt told the New York Times. “There is a large selection of relatively undervalued businesses in the Heartland between the coasts, some of which can scale quickly.”
According to the Times‘ story, the goal is for Case and Hillbilly Elegy author JD Vance, who recently joined Revolution as a partner, to provide seed investments, and then bring on some of the bigger names to invest more money in these companies later on.
“While the network in Silicon Valley is obviously something that is great, it can also have an exclusionary effect that prevents investors from looking at and finding opportunities that exist outside of their networks and outside of their geographies,” Vance told the Times.
VentureBeat has reached out to Case’s public relations team for more information and will update with any additional comments.