With entrepreneurship spreading from its traditional centers in Silicon Valley, Massachusetts and New York, investing in less explored regions of the country is becoming the “greatest arbitrage” opportunity of a lifetime, Revolution CEO Steve Case said.
Valuations are lower in cities across the nation’s heartland and capital is less available, Case said at the Disrupt SF conference in San Francisco. At the same time, the third wave of innovation sweeping into traditional industries, such as healthcare and agriculture, is making domain expertise and partnering more important, and underscoring the importance of being near potential customers.
Think of St. Louis, where Monsanto is located.
Still, about 75 percent of venture capital last year went to the three states with the largest venture hubs: California, Massachusetts and New York.
“It really is about leveling the playing field,” Case said. “We want to make sure there are opportunities to be part of the startup economy everywhere.”
Case added that he is already observing the beginnings of a slowing in the regional brain drain to places such as Silicon Valley. This will be a mega trend over the next decade, he said, with an ebb in the thinking that an entrepreneur needs to move to Silicon Valley.
Revolution raised its $150 million Rise of the Rest Seed fund in December and has invested in a dozen companies, including StockX in Detroit. Case said he thought it would be a smaller fund.
The firm’s goal is to partner with institutional capital on the coast as well as local VCs.
“Creativity is everywhere (and) opportunity is not,” he said. “This is not anti Silicon Valley.”