The entrepreneurial clusters outside of Silicon Valley are rising, and that includes North Carolina.
So says David Hall, the managing partner at Revolution’s Rise of the Rest Seed Fund, who will be at Ironclad Brewery in Wilmington Nov. 16 from 4 p.m. to 7 p.m. to talk to North Carolina entrepreneurs.
Revolution, based in Washington, D.C., was founded by AOL co-founder Steve Case, who launched Rise of the Rest to cast a spotlight on entrepreneurs outside traditional startup hubs of Silicon Valley, Boston and New York. The fund’s investors include people like Amazon (Nasdaq: AMZN) founder Jeff Bezos and former Google (Nasdaq: GOOG) CEO Eric Schmidt.
In an interview, Hall talks through how to get on his $150 million fund’s radar, and the AI opportunity ahead for places like North Carolina.
He said the best way to get on a venture capitalist’s radar is consistent communication.
“You can’t expect to have a pitch at your first conversation,” he said, noting a warm email introduction is a great place to start. He says it’s key to target investors in your industry that have a history of investing in your region.
“There are a lot of people who want to invest in the Southeast in general,” he said.
Hall said it’s been a tough fundraising environment for entrepreneurs. The ecosystem went from sky-high valuations to pickiness on the part of the investor. Hall called valuation both an art and a science, and said the last few years have “really flexed the art in valuations.”
“I think the sobriety today is looking at the science of valuations,” he said. “That really starts to force both co-founders and investors to look at the metrics, the traction of the business, the revenue, the harder things to fluff, versus two, three years ago you could have gotten a lot of money based on an idea.”
The market is now fact or “traction oriented,” not “dream oriented,” he said.
But there is one sector that’s getting a lot of dollars: Artificial intelligence. Raleigh’s Pryon recently closed on $100 million. The sum included an infusion from Revolution’s Rise of the Rest Fund. Hall said about 80 percent of the pitches he’s seen recently have AI in the first two pages of the pitch deck. While the first real wave of AI startups are coming out of Silicon Valley, he sees the next surge coming from places like Raleigh. And that’s because the next phase involves startups deploying AI in “real industries.”
“Those are going to have to live outside of the Bay Area,” Hall said. “If you’re going to innovate around farming or education or workforce development … you’re going to need some lived-in experience.”
Take the potential of AI in agriculture. It can’t come from Silicon Valley – it has to come from a place with actual farms, Hall said. “It’s only going to be able to come from the hands of the people that are going to do the job,” he said.
That bodes well for places like North Carolina, where a supply of industry and top tier research universities could have a unique opportunity to both innovate and apply AI in real world scenarios.
The rise of remote work forced proved that the internet can connect entrepreneurs – no Silicon Valley address required, Hall said. Before the pandemic, entrepreneurs found themselves hopping jets for days of meetings in Silicon Valley.
“They’re able to do 90 percent of those meetings on Zoom now,” he said. “They can stay home and take those meetings as opposed to displacing their life to secure the funding.”
Hall said that gives innovators freedom to come home to places like North Carolina and create amazing companies.
The Network for Entrepreneurs in Wilmington is hosting Hall at its free event Nov. 16. The theme of the event is Helping Wilmington Startups Rise Above the Rest. It’s part of the Global Entrepreneurship Week series of events in Wilmington.
