Steve Case, the cofounder and AOL and the creator of a series of tours called Rise of the Rest that highlight startup activity in places outside of Silicon Valley, has secured $150 million for a new venture capital fund. Also called Rise of the Rest, this fund will invest in startups in these traditionally overlooked markets. Additionally, Case has got backing from some big names in Silicon Valley.
The New York Times broke the story 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 with entrepreneurs and investors in 33 cities — hosting a pitch competition in each one where startups have the chance to win a $100,000 investment from Case. Case is also the Chairman and CEO of Revolution, a separate venture capital firm that seeks 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 the fund is the first in a series of many concrete steps that will be needed to close the venture capital gap between Silicon Valley and the rest of the country. 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.”
However, it’s unlikely that a fledgling entrepreneur in Indianapolis will easily be able to get funding from Bezos and Schmidt thanks to Case’s new fund. 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.