The Midwest and the venture capital industry have traditionally had a tense relationship. When markets are doing well, investors flock to the coasts, but when they are not, they flee. For Drive Capital, a Columbus, Ohio-based company, this cycle of enthusiasm and disinterest occurred against the backdrop of internal turmoil a few years prior — a break among co-founders that may have brought the company to an end but might have actually made it stronger.
In the current venture environment, Drive at least accomplished something noteworthy in May. Within days of cashing out Thoughtful Automation, a company based in Austin, and another unnamed company, the corporation distributed roughly $140 million worth of Root Insurance shares, returning $500 million to investors in a single week.
Yes, it can be considered a gimmick, but limited partners were probably happy. Speaking to TechCrunch from Drive’s headquarters in Columbus’s Short North area, Chris Olsen, co-founder and current sole managing partner, stated, “I do not know of any other venture firm having been able to attain that type of liquidity recently.”
Three years ago, Olsen and his co-founder Mark Kvamme, who were both former Sequoia Capital partners, parted ways, leaving the company with existential concerns. This is a significant turnaround for the company. Following the split, which caught the firm’s investors off guard, Kvamme went on to establish the Ohio Fund, a more comprehensive investment vehicle centered on the economic development of the state that includes investments in manufacturing, real estate, infrastructure, and technology.
Olsen claims that Drive’s recent success is the result of a purposefully unconventional approach in a market dominated by “unicorns” and “decacorns”—businesses with respective valuations of $1 billion and $10 billion.
“Everyone usually talks about the $50 billion or $100 billion results if you just read the press or listen to coffee shops on Sand Hill Road,” Olsen stated. However, the truth is that although those results do occur, they are quite uncommon. There have only been 12 results in America worth more than $50 billion in the past 20 years.
He pointed out that there have been hundreds of M&A deals at that amount as well as 127 initial public offerings (IPOs) at $3 billion or more. “You can do something that happens every single month if you can depart companies at $3 billion,” he stated.
Leave feedback about this