Drive Capital LLC invests where the vast majority of VCs don't — and it has $1 billion more to do so.
Over the past decade, the Columbus, Ohio, venture capital firm has invested throughout the Midwest. Now it says it's looking for high-growth technology companies "between the Hudson River and the Rocky Mountains."
Drive on Tuesday announced the closing of two new funds, but did not enumerate them. The firm now has $2.2 billion under management.
In December, sibling publication Columbus Business First reported the firm's regulatory filings and public documents from investors indicated it was raising a $600 million second Overdrive Fund for later-stage technology companies and a $350 million to $400 million Fund IV in its traditional seed and Series A space.
Mark Kvamme and Chris Olsen, veterans of Sequoia Capital in Silicon Valley, founded Drive in Columbus in 2013, and still follow the same investment thesis: Build tech companies in the middle of the country, where they have the best access to the majority of U.S. engineering graduates and Fortune 500 customers — and where Drive has little competition from coastal VCs to get in at the earliest stage.
"We believe that our capital, expertise and relentless work ethic can untap billions of dollars of value," Olsen said in a release. "We are proving our ‘Driveway’ thesis out, and our two new funds position us to take founders even farther over the next 10 years."
Partners were not immediately available for comment.
"It is critical that venture firms have the resources to follow their convictions and readily provide their portfolio companies with more capital when they need it the most," partner Molly Bonakdarpour said in the release.
Central Ohio companies in Drive's portfolio accounted for $983 million of the region's record $1.4 billion in VC raised in 2021. The region made up more than half of the $2.3 billion raised statewide — but Ohio still remains stuck at less than 1% of U.S. VC investment.
Two Drive companies have had IPO's — Columbus-based Root Inc. and Pittsburgh-based Duolingo Inc. — although both stocks have struggled since.
Drive was the first and largest investor in Root, and invested in several large Columbus companies when they were still ideas — Olive AI Inc. (then CrossChx) and Path Robotics Inc.
The firm moved Beam Dental to Columbus from Louisville while it was selling a smart toothbrush but still building out its main business of all-digital dental insurance as an employee benefit. It's poised to double membership again this year.
The firm's latest unicorn is Immuta Inc., valued at $1 billion in a $100 million round this month. The Boston cybersecurity startup is expanding the Short North office it opened five years ago.
Forge Biologics, a gene therapy startup, is growing rapidly toward 400 jobs in Grove City.
Most of Drive's companies so far have been able to conserve capital and avoid the waves of terminations crashing through venture-backed tech companies around the country. But they haven't been entirely immune.
"Times like these exemplify the upside of building a company outside of Silicon Valley," Olsen said in a statement in mid-May. "This is a buyer's market, and the companies that adapt quickly will be able to use this as an opportunity to build market share and emerge more valuable."
Root cut 330 jobs in January, while Beam and Olive hired hundreds. Since then, Olive has instituted a hiring freeze. Cybersecurity startup Finite State Inc. eliminated 16 positions this month.
Circulo Health, which uses Olive technology, cut 20% of staff last week in a pivot away from its original model to reform Medicaid managed care. At the same time, the business is hiring hundreds of direct care providers in its new focus on home and community-based services for those with intellectual and developmental disabilities.
Pension funds started investing in Drive's new funds last summer, according to meeting minutes.
Drive's local limited partners from its first funds include Huntington Bancshares Inc. and Ohio State University. It was not yet clear if they joined these latest funds.
"We’re still feeling pretty good about (Drive)," OSU CFO Mike Papadakis told Business First in May. "We’re still happy with the strategy there."
