Beyond the Pitch

Rev1 Ventures Launches $22 Million Seed Fund to Fuel High-Growth Startups

Today Rev1 announces the launch of Rev1 Fund I, the company’s most significant fund to date and the largest seed stage fund in Columbus history.

Read the full announcement and my Q&A with Fortune’s Dan Primack.

This new fund is corporate-backed, which makes it a first-of-its-kind for the region, proving the power of community support and hitting another home run for our Backyard Effect.

Rev1 Fund I is supported by Nationwide, The Ohio State University, Cardinal Health, and other top companies and organizations, including The Ohio Third Frontier. Rev1 made a significant investment in the fund as did the Rev1 management team.

So, why is this new fund so important?

Because it allows us to provide more early-stage startups what they truly need—more significant initial and follow-on investment rounds as well as continued support through strategic services. With the new fund, we can provide investments of up to $1 million, leading or co-investing in larger financing rounds, helping startups invest in the market development and talent needed to innovate, build, and scale their products while also fueling local job growth.

What the Rev1 Fund I investors and supporters have to say about this ground-breaking collaboration:

“Today’s early-stage businesses in Columbus represent the future of our community, and Crane Group is excited to join Rev1 Fund 1 in its mission to support the growth of these local entrepreneurial thought-leaders.”

Crane Group, Stephanie Fortener, director, Crane Investment Company

“IGS Energy supports finding entrepreneurial solutions to social problems and is proud to support the development of new central Ohio business ventures.”

IGS Energy, Scott White, president and CEO

“This really is the region’s fund to support the region’s startups.  Nationwide, for one, is committed to supporting local entrepreneurs and we know that with Rev1 at the helm, this fund will help high-growth startups make the most of their investment opportunities and set the foundation for long-term success.”

Nationwide, Harry Hallowell, Chief Investment Officer and also a director on Rev1’s board

“The Rev1 Fund aligns with Worthington Industries’ increased focus on innovation and also provides capital to accelerate the growth of promising business concepts in the central Ohio region.”

Worthington Industries, Andy Rose, Chief Financial Officer

“Insurance, like virtually every other industry, will undergo substantial change and disruption over the next decade. Some of the best and most innovative ideas will come from outside of the insurance industry and by partnering with Rev1 and investing directly in local entrepreneurs and innovators, we hope to be at the forefront of participating in these game changing ideas and new capabilities. We are thrilled beyond words that Rev1 is helping Columbus, Ohio, our hometown, become one of the most impressive entrepreneurial communities in the country.”

State Auto Insurance, Kim Garland, Managing Director, State Auto Labs

 “Columbus is an exciting community with great businesses.  We are creating an environment that is attracting and retaining very smart people to start businesses and create jobs.  The Rev1 Fund is playing a major role in the start-up activities in Ohio.”

David Meuse, principal at Stonehenge Financial Holdings, Chairman of the Board, Rev1 Ventures, and investor in Rev1 Fund I

“Tom Walker’s and Rev 1 Ventures’ leadership is leading a renaissance in Columbus’ entrepreneurial scene. These new capital sources will help ensure we maintain our tremendous progress.”

Columbus Partnership, Alex Fischer, President and CEO

  • Kristy Submeral

    Congratulations on the new fund. Unfortunately having early stage funding tied to an entity that has a poor track record of community support will not help. Columbus needs more parties involved in investing, spreading the early stage support, rather than using a government funded organization making investment decisions.

    • Lori Kendall

      What’s wrong with Ohio Third Frontier as a funding source? It enables Rev1 Ventures to accelerate its role as an incubator and early seed investor. Larger VC entities with just private investment capital are unlikely to make significant inroads in Central Ohio until the market is sufficiently diverse and the talent from local universities stays put after graduation. In this case, Rev1 fills a missing hole.

      • Kristy Submeral

        Lori,
        There’s nothing wrong with State money providing stimulus dollars for company creation. The problem lies in concentrating all the economic growth capital in one decision body, thus creating an unnatural system constraint. Rev1 in this case doesn’t serve as a hole filler, but more of a blockage. It a common problem that startup communities must actively seek to avoid: the feeder attempting to control the community.

        Locking up multiple early stage funds (angel, government, seed and now corporate) under an organization with potentially conflicting objectives (is Rev1 creating jobs and growing the tax base, maximizing a return for the LP’s or driving impact? Pick one you can’t do it all) is a recipe for stifling innovation and driving straight towards mediocrity.

        Imagine that you are trying to get a house loan, which scenario would you prefer?
        1) There is only one bank in town and the loan officer doesn’t like you.
        2) There are multiple banks all in competition for clients and competing on loan terms.

      • Dane Hunt

        I agree with Kristy on this one. Nothing is wrong with state money in itself but it creates a monopoly for funding in the area at this stage which seems pretty obvious isn’t the right way to go about it.

        Ironic especially for funding startups tackling problems in a free market that their investors would be state funded monopolies.

        Even the best meaning organization can’t thrive without the right incentives or competition.

      • Lori Kendall

        I’ve read the comments from both Kristy and Dane, but the arguments seem to be missing some key points.

        While initial equity markets driven by private investment developed in centers like California’s Silicon Valley following WW II, one significant impetus that led to creation of expanding private capital markets beyond wealthy individuals was the creation of the SBA. No one can credibly argue that SBA stifled innovation in the post WW-II era. Sector stimulus is often a combination of public and private investments. Interestingly, one of the largest private VC firms in Columbus came about after working with public sector investment groups.

        My initial point stemmed from one significant concern I have about relocating here: 19% of patents come from the Midwest, but less than ~5% equity is invested here (which is an increase from where the program started from). This is a big deal.

        Rev1, the role of Ohio Frontier, and expansion of private equity markets are not at odds with each other, unless you believe the pot is shrinking, and every dollar controlled by a private/public partnership is one dollar less for the private market. Do you have evidence that entrepreneurs and potential LPs do not have market access?

        More capital will come to Ohio with good financial track records and “hits” based on performance. And this will take time. OH is still considered the hinterland by many of the investment community in CA and NY. Track record will change that.

        As to the point questioning the role of Rev1 as an entity (which was the initial criticism), fair enough. Let’s start with the premise that you have a valid argument concerning the role of Rev1/OTF. What would you do as an alternative that demonstrably grows the share of equity capital that flows to Ohio?

        In short, criticizing the role of Rev1 and OTF is well and good, but the argument seems grounded in a blend of opportunity cost tradeoffs and the logical fallacy of less efficiency by a unitary body acting as a monopoly. I don’t see the compelling line of thinking behind that objection.

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