Revolution closed its $525 million Revolution Growth III fund this week, pushing Revolution's total capital funds past the $1 billion mark and going well beyond the $450 million original target for the fund. Managed by Donn Davis, Steve Case and Ted Leonsis, there will be just a few investments of $25 million to $50 million or so, is aimed at companies with the potential to really change massive industries.
"We're not looking for a lot of small investments, we want to find the few iconic companies out there," Davis told DC Inno in an interview. "They're the ones disrupting the big industries."
Like the previous fund, the new money is not for Silicon Valley startups. Rather than look to the hive of activity in California, Davis said that the rest of the country is where Revolution wants to find startups to invest in. That all fits with Case's philosophy of the "Rise of the Rest," the idea that there are other hubs for innovation that don't get the attention and capital investment that they should
"We're looking at the other 49 states," Davis said. "There's so much innovation outside Silicon Valley in these other cities."
The Washington, D.C. area is high up on that list, judging from the number of companies around the District that Revolution Growth has invested in like sweetgreen, CustomInk and Optoro. It accounts for about a quarter of the fund since 2011, Davis said.
"D.C. is a great city to look for the [startups] we might invest in," Davis said.
"It can take a decade to become an overnight success."
But the point of Revolution Growth compared to Revolution Ventures is that these are long-term investments, not ones that will necessarily pay off in the short term. Thinking of investment in terms of that timescale can be tricky, but Davis points to where he, Case and Leonsis are at in life as a positive in that regard.
"The benefit of us being in our 50s is that we've seen a lot of [startup] cycles," Davis said. "It can take a decade to become an overnight success. You have to push for patience over urgency. Building a company is hard and takes a long time. The real iconic ones are patient."
