Three Reasons Why the “Rise of the Rest” Matters Now More than Ever
This past week, Steve Case, co-founder of AOL and CEO of DC-based venture capital firm Revolution, announced that this fall he will start up the bus for our fifth version of the “Rise of the Rest” tour. Mr. Case will be joined by a group of partners — including Village Capital, of course — who are equally passionate about supporting entrepreneurs.
From October 3–7, we will embark on a celebration of American entrepreneurship all across the U.S., as we literally take a bus on tour through five US metro areas — Lincoln/Omaha, Denver, Salt Lake, Albuquerque, and Phoenix. If you’re in one of these cities, and are interested in the opportunity for a $100,000 investment from Steve Case, apply here!
Our goal is to connect people across these cities who care about startups; celebrate the entrepreneurs making tremendous progress, and challenge communities to do more to help their startups succeed.
What is the “Rise of the Rest?”
Entrepreneurship is at the core of what has made America the most successful, innovative country in the world. To quote Steve Case, “250 years ago America itself was a startup.” According to the Kauffman Foundation, in the past thirty years, 100% of net new jobs in the country have been created by startups — that’s 30 million Americans who work for a company that didn’t exist 30 years ago. On its face, it seems entrepreneurship is booming. Over the last decade, we’ve seen the launch of over 150 “unicorns” — what the media calls companies worth more than $1 billion in value.
Then why are most Americans are worried about the direction of the country’s economy? They are worried because to date, the economic recovery has been concentrated in only a few places.
According to the Economic Innovation Group, a Rise of the Rest partner, the twenty wealthiest metro areas have seen significant progress in entrepreneurship in the last thirty years, but the rest of the country has seen a sharp decline. 78% of startup funding goes to three U.S. states (New York, California, Massachusetts); when we looked further into the data, we noticed that since 1995, startup funding increased 300%, but startup funding in the rest of the country has declined. And only a small group of people are getting a shot: less than 5% of startup funding goes to women, and less than 1% of startup funding goes to people of color.
Simply put: 30 years ago, more businesses in America were starting than dying each day; now, more ideas are dying than starting. For the U.S. economy to turn around, we need the rest of the country — the part we’re not investing in today — to rise.
Why the “Rise of the Rest?”
It’s easy to read those numbers and be discouraged. The good news: entrepreneurs are leading a renaissance in the rest of the country — and we’ve seen it on the road in twenty cities over the past few years. In driving over 4,000 miles through 20 cities, Steve Case often talks about “the Ps of entrepreneurship.” In that spirit, here we’d like to highlight “Three Ps” why “Rise of the Rest” matters now more than ever.
When everyone in the country gets a shot to build a business, we get better results.
In Atlanta, Jewel Burks and Jason Crain, co-founders of startup PartPic, were working on the front lines of a vehicle repair company. In doing so, they noticed a better way for manufacturing and repairs to operate. They got $100,000 on the Rise of the Rest tour, and their company, PartPic, has transformed an industry in ways that top-down innovation couldn’t. They are now raising $2M to fuel their growth.
Jewel and Jason, as African-American co-founders, represent a demographic that raises less than 1% of start-up funding; and typically, CEOs of manufacturing companies don’t look to front-line workers to come up with solutions that will transform their industries. We worry about where the next generation of American economic growth will come from, but in the Rise of the Rest tour, we’ve seen the best ideas are right under our nose — it’s just that most people with capital aren’t paying attention to the people who have them.
Rise of the Rest entrepreneurs are at the center of rebuilding America’s communities.
As we’ve traveled the country on the Rise of the Rest tour, we’ve seen startups — and a local innovation economy — as a common purpose that can bring people together in a way that few other causes in society can. In Nashville, the music industry is a common bond for most people. We saw Artiphon, which helps musicians start, promote, and market themselves, receive a $100,000 investment, helping Nashville, not Silicon Valley, become the center of how entertainers can build their own careers. And in Cincinnati and Baltimore, we’re seeing startups revitalize neighborhoods such as Over-The-Rhine and West Baltimore, which a decade ago were one of the most violent neighborhoods in the country, and leaders such as Derrick Braziel, building Mortar in Cincinnati, and Rodney Foxworth, building the Impact Hub in Baltimore, to ensure that the revitalization happens in a way that includes everyone.
The future of our communities depends on the entrepreneurs we invest in today. In Rise of the Rest geographies, we’re seeing entrepreneurs — and the leaders who support them — create a collaborative, bipartisan public space where people can put politics aside and focus on supporting their communities.
If you watch the TV comedy “Silicon Valley,” you’ll see founders creating fictional companies like a social network for yoga instructors and talking about how their invention will “change the world.” The frivolous startups on the show seem like a joke: but the joke might actually be true. In 2015, TechCrunch, the top news outlet for Silicon Valley startups, recognized their “startups of the year.” The winners: an app that helps you book expensive hotels at cheaper prices; a website that helps you buy high-end mattresses; a specialized social network for college students; and an Uber for marijuana delivery. Collectively, these four startups have raised $225 million to fuel their growth. (Kim Kardashian won a fifth award, but we couldn’t find out how much was invested in her.)
People across the country increasingly feel that the problems that Silicon Valley startups are solving are out-of- touch with the country’s needs. Encouragingly, though, in Rise of the Rest cities, we’re seeing a very different story: entrepreneurs solving real-world problems that Americans face every day.
After visiting Detroit, for example, Revolution’s Growth fund made one if its largest investments to date in a company, Shinola, whom we met on the tour. Shinola is building on Detroit’s manufacturing expertise to create a model for 21 st -century American manufacturing jobs. In Des Moines, PearDeck received a $100,000 investment to create a solution that helps teachers assess, in real-time, whether students are actually learning. The company is building on Iowa’s interesting and important role as a national center for testing and assessment (you might remember the Iowa Test of Basic Skills from high school). And in Richmond, WealthForge, which helps small businesses access capital, received a $100,000 Rise of the Rest investment, building on Richmond’s expertise as an industrial center in innovative financial services.
As Steve Case writes in his recent book, The Third Wave, innovation on the Internet is no longer limited to the apps on your smartphone, increasingly integrating into the areas that matter in everyday life — health, education, energy, transportation, and food — and we’re seeing the Rise of the Rest cities lead the way in creating real companies with real impact on society. The next great innovation in our food systems, for example, is more likely to come from Omaha, Louisville, Minneapolis, or St. Louis than New York poor Silicon Valley.
Starting the bus
So, from October 3–7, we’re starting the bus again, and we’ll be spending one day each in Lincoln-Omaha, Denver, Salt Lake, Albuquerque, and Phoenix. If you’re a startup in one of those cities, and want $100,000 from Steve Case, if you care about any of those communities — or want to see how startups are building America’s future — join us along the way. See you on the road!