According to Steve Case, AOL cofounder and CEO of the venture capital firm Revolution, a thriving national ecosystem of startups is essential to a prosperous United States. It's why he and his partners have recently invested half a million dollars to scale five startups in the southeastern United Statese.
It's also why he founded Revolution in 2005 with what he called a "Rise of the Rest" ethos, the idea that there was a wealth of untapped potential for profitable growth outside of Silicon Valley. As Case always points out, about 75% of venture capital in America goes to California, New York, and Massachusetts, with around a full 50% going to the Valley alone.
Case applied his founding phrase phrase to a $150 million seed fund in 2017, and a series of bus tours that started in 2014. He wrapped the seventh Rise of the Rest tour in early May, this time traveling through Dallas, Texas; Memphis, Tennessee; Birmingham, Alabama; Chattanooga, Tennessee; and Louisville, Kentucky.
Case and his Revolution team spend a full day in each city, leading to a "Shark Tank"-like pitch competition among seven or eight founders. The winning company receives $100,000 from the seed fund. That fund is overseen by "Hillbilly Elegy" author and former Valley investor JD Vance, and comprises contributions from prominent business leaders like Amazon CEO Jeff Bezos, Bridgewater Associates founder Ray Dalio, and former Hewlett Packard CEO Meg Whitman.
Another aspect of the Rise of the Rest approach is moving past the fact that an overwhelming amount of venture capital goes toward white males — Case is also quick to point out that about 1% of this funding goes to black entrepreneurs. "One of the things I've noticed is that when you go outside the traditional Silicon Valley network, sometimes you find entrepreneurs who don't look like the stereotypical Silicon Valley entrepreneurs," Vance told Business Insider. "And that's been one of the really cool things about what we're doing."
It's why the Revolution team deliberately works with different groups in every city to select a diverse group of entrepreneurs to compete for an investment. Each tour takes about four months of preparation, and the Revolution partners, as well as guest judges who join the tour, do due diligence on each of the competing companies. The four-minute pitches and the brief question-and-answer sessions that follow serve as a way to see how the founders present themselves and their businesses and provide a chance for the judges to share their impressions.
"These are national scale, maybe even global scale companies," Case told us, referring to highlights of the week's trip, even beyond those in the competitions. "They just happen to be in Louisville, they happen to be in Chattanooga, so they shouldn't just have regional ambitions. They can go the distance."
In the most recent Rise of the Rest tour, which spanned five days in May, the following entrepreneurs were awarded investments:
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Cameron Johnson is the cofounder and CEO of Nickson, an apartment furnishing company based in Dallas, Texas
Johnson and his cofounders started Nickson last year as a way to provide customers who rent their living space with fully furnished apartments for a monthly fee.
At one of his talks in Dallas, Case said that, "There's no question it could emerge as one of the great startup cities," but said that the community needs to continue to embrace new talent "and create a culture that's more focused on innovation and risk-taking."
He and his panel of judges decided that Nickson fit the mold of a company that should be fostered there.
Gebre Waddel is the cofounder and CEO of Soundways, an audio software company based in Memphis, Tennessee
Waddel and his cofounder started Soundways in 2016 to create the audio production software they wanted to see.
Memphis, with its rich community of musicians, provided the perfect testing grounds and led to a partnership with audio giant Avid last year, allowing Avid users to easily integrate Soundways programs into their workflow.
Ashlee Ammons is the cofounder and COO of Mixtroz, a networking app company based in Birmingham, Alabama
Mother-daughter team Kerry Schrader and Ashlee Ammons founded Mixtroz in 2014 to address the all-too-common scenario of networking events where attendees either stick with their friends or have meaningless conversations with strangers.
With Mixtroz, event coordinators can invite guests to download the app and use it to see who is in attendance, and who would best fit the type of connections they're trying to make.
Before handing Ammons her oversized check, Case said, "we can take this company and really have it be one of the leaders of Birmingham of tomorrow."
Craig Fuller is the founder and CEO of FreightWaves, a freight market data company based in Chattanooga, Tennessee
Fuller's dad Max is the cofounder of US Xpress, the largest freight truck company in America, and it helped make Chattanooga a freight hub.
Growing up in that industry, Fuller decided last year to create FreightWaves, a company he said was partially inspired by Bloomberg. It's a hub for a wide variety of people involved in the freight market, providing real-time data for freight across North America, market projections, and original analysis.
"This is a winner I think really represents the future of Chattanooga — that builds on the legacy of Chattanooga — around logistics," Case said.
Maggie Galloway is the cofounder and CEO of Inscope Medical, a medical device company based in Louisville, Kentucky
Louisville has long had a robust healthcare market, and its Rise of the Rest winner is taking advantage of the network.
Galloway is an MBA graduate who partnered with physicians to found Inscope Medical in 2014. The company spent years developing its first product, a wireless video laryngoscope, a device that allows medical professionals to view inside a patient's throat.
The device is intended to be not only the best quality option available, but also more affordable and easier to wield than existing high-end competitors.