Federal backing and Rev1 Ventures' own investment returns are fueling a $6 million fund focused on founders underserved by venture capital.
Future Value Fund II also targets the very earliest "pre-seed" and "seed" stages disproportionately affected by the current VC dry spell.
"Closing a meaningful round in a reasonable time frame can be incredibly challenging," Ryan Helon, Rev1 executive vice president of investment funds, said in a news release. "Rev1 is committed to supporting companies at the earliest stages of growth by providing founders access to funding, industry advisors, and connections that can help them succeed, and we continue to focus on helping make Ohio one of the best places to launch and scale great technology companies."
Pre-seed investments nationwide were halved in 2023 compared to the prior year, according to Crunchbase, and overall VC investment is at the lowest point since 2018.
Startups with solely female ownership still represent about 2% of venture investment nationwide, according to the latest data from PitchBook, and another 23% when founding teams have men and women.
Investments in Black-owned startups fell to 0.5% of the nationwide total last year, declining faster than the VC slowdown overall, Crunchbase reported.
The first Future Value has invested in seven startups with Central Ohio root, and aims for a portfolio of about 15. That $10 million fund, launched in 2021, was equally backed by Rev1 and Ohio State University.
Among its investments are Columbus-based health IT company Redi Health, which this year raised a new $14 million round after more than doubling adoption of its app to help manage chronic disease.
The second fund will back about 10 startups over the next four years, the release said. Rev1 looks particularly to tech with growth potential serving Central Ohio's largest industries, such as health IT, insurtech, as well as emerging technology such as AI.
The majority of the new fund's investment committee are women, and it will look for diverse founding teams and startups in the areas served by Community Development Financial Institutions.
Aventi Enterprises and other regional support organizations will augment Rev1's own accelerator and training programs, the release said.
Half of the fund is from a federal program managed by the Ohio Department of Development: the Ohio Early Stage Focus Fund Program, funded by the U.S. State Small Business Credit Initiative.
The state last year received $52 million in federal Covid relief from the U.S. Department of Treasury to support very small businesses and entrepreneurs from "socially and economically disadvantaged" backgrounds, according to the program website. Besides early stage, other program segments include loans and as backing of professionally managed VC funds. If the state meets performance targets, it can qualify for $130 million more.
The other $3 million is from Rev1's investment returns, so earlier entrepreneurs' success supports new founders, said a statement from CEO Tom Walker. Notable exits for Rev1 include the acquisition of Updox and a private equity investment in Mentorcliq, both of which continue to operate in Central Ohio.
In recent years Rev1 has launched more funds without drawing on Ohio Third Frontier, a bond-backed program that still provides operating grants to the nonprofit.
