Earlier this month, Revolution raised its third growth fund, arguing that a strategy of looking beyond Silicon Valley makes sense in a world where innovation and entrepreneurship are less tied to specific locations.
The message seemed to resonate. The fund targeted $450 million (the size of the firm’s second fund) but closed on an oversubscribed $525 million.
With an investment horizon of four to five years, it will dole out capital at a measured pace, with three to four investments annually and initial checks of $25 million to $50 million.
What’s striking is the increase in partners managing the capital pool: six partners instead of three supporting the previous fund.
The firm stresses “team dynamics” and the importance of a hands-on role with companies, said Steve Case, Revolution co-founder and co-founder of America Online. “We do spend more time with our companies,” he said during an interview this week.
Of note as well is Case’s insistence that policy matters will have a greater impact on startups in the years to come than many young businesses realize. It is a theme explored in his recent book, “The Third Wave: An Entrepreneur’s Vision Of The Future.”
The importance of policy will accelerate in five to 10 years, and many entrepreneurs and VCs don’t yet think enough about it, he said.
Case advises entrepreneurs to address the risk by, first, paying attention to the implications of policy and, second, building networks of experts to help think through policy questions. Startups also can align with like-minded companies to increase their voices, including competitors, and strike partnerships with companies that have policy experience, such as a General Electric.
Looking outside of Silicon Valley is an investment strategy driven by lower prices and competition. “Valuations are lower at the entrance, but not lower on the exit,” Case said.
In addition, deal flow is better than many people think and improves as investors spend time in a location.
“The pace of the rise of the rest will accelerate,” Case said, referring not just to communities across the country, but around the world.
Photo of Steve Case, seen here speaking at VCJ’s Venture Alpha West conference in San Francisco in 2012, by Oscar Urizar, Red Eye Collection for VCJ.