joining us now to discuss the latest trends in VC
investments. We've got steve case, who is the
co founder of A. O. L. And
the ceo of revolution Ventures steve great to have you
here with us today. We got to dive right
in in the interest of time 2021 turning out to
be a record year for venture capital funding. But
it seems that these early stage dollars are moving beyond
Silicon Valley. So walk us through some of the
key findings from your report. Yeah, Silicon Valley
continues to dominate, but it's dominating less and we're
starting to see a dispersion of capital and dispersion of
talent. We've seen this building in the last few
years but really accelerated because of the pandemic and three
particular statistics I find interesting is that the bay area
for the first time in 10 years has less than
30% of venture capital. That's interesting.# two
is The number of venture capital dollars in what we
call these rise of the rest cities. The cities
outside of San Francisco New York and Boston, the
up and coming rising startup hubs has gone up 600%
from about$4 billion 10 years ago to$24 billion
dollars now. And the statistic that is most striking
and I think most encouraging in terms of what will
happen over the next decade Is there is now 1400
new institutional venture capital firms outside of those major tech
hubs outside of San Francisco New York and Boston.
So the fact that the overall dollars in Silicon Valley
are declining the fact that we're seeing a dramatic acceleration
of venture capital going to these other rise of the
rest cities. And the fact we've seen a dramatic
increase in the number of regional venture capitalists I think
really bodes well for what we've been working on it
revolution for the past decade. Now. How do
you level the playing fields, entrepreneurs everywhere have access
to capital and communities everywhere can back the startups that
can create the jobs that can power their communities in
the future. Ok, so let's walk through some
of those cities where the funding is now starting to
trickle more towards because this report is particularly interesting and
I'd love to know if there's a common denominator that
you're seeing in some of those cities whether they be
L. A. Or Seattle Austin even philadelphia making
the list as well. And there are some common
dynamics and we've published a number of rise. The
rest reports talking about, you know what's happening in
different cities based in so far visited with our rise
. The rest bus 44 cities over the last 67
years, our rise the rest fund is invested in
180 companies in over 80 cities. So we really
have a broad network and we've co invested now with
over 300 of these regional venture capitalist. So we're
seeing a lot of things in these different cities.
Each one is a little bit different. But some
of the dynamics are, they are becoming a magnet
for talent. Historically there's been a brain drain and
a lot of these cities, people leaving for opportunity
elsewhere now people are staying. Indeed, some people
are boomeranging back. There tends to be a collaborative
effort in the, in the community really support startups
to recognize the future of the community. Are the
new companies that someday can be the big companies,
there often is a tent pole company there that really
can kind of show the show the community, they
can really build a significant company and then over time
there's some spin off benefits from them. Often they're
strong universities there that are really focused on entrepreneurship.
Some of the bigger companies, some of the Fortune
500 companies are focused on trying to back startups and
often there are some lifestyle reasons to be in some
of these cities, maybe Because of the outdoor is
a city like a Denver or Salt Lake City would
be appealing or in some cases again accelerated by the
pandemic. There might be some family reasons that people
want to be in some other place. I think
the main news is maybe 10 years ago, that
wasn't really a choice. People had, if they
wanted to be part of the innovation of comedy,
they want to be part of the startup world,
they kind of had to go to Silicon Valley or
maybe new york or, or boston. Now the
evidence is pretty clear, you can start a company
anywhere, you can scaled anywhere, you can attract
capital now, anywhere you can attract talent now,
anywhere. The last point I'll make is in this
next wave of innovation when we're shifting from focusing on
software to really as a stand alone to really integrate
it into some of the most important aspects of our
lives like staying healthy are being educated or investing money
or or what we eat, things like that.
Those are the biggest sectors in the economy, healthcare
ag et cetera and the domain expertise and the key
partners in those sectors often are in the middle of
the country, not on the coast. So I
think people are gonna be surprised over the next decade
how much happens in these rise of the rest cities
? I think this report, it's evidence that the
thesis that we put in place a decade ago is
now working. I think it will accelerate over the
next decade. It's also the industries that are tied
to those cities as you point out and it kind
of stems from the talent. I mean if you're
looking at a city like uh north Carolina for instance
, and I'm just throwing random city out there or
state out there, I should say people think about
the research triangle in north Carolina, they think about
potential bio pharma developments in biotechnology and investment. So
within those industries and perhaps that gives us a little
bit more of a sense of how quickly we can
expect certain cities to grow up if we think about
which industries are getting the most investment, where are
those industries, which industries are getting the most investments
as of right now? Well some of the same
health care alone has 1/6 of the economy and and
and there is a recognition that it's really ripe for
innovation ripe for a disruption. It's kind of inconvenience
, kind of ineffective and often in terms of the
outcomes and often very expensive. So there's a lot
of innovation happening there. Some of the most important
cities in terms of health care like Baltimore where johns
Hopkins is located located or Cleveland, where the Cleveland
clinic is located or in texas MD Anderson or in
Minnesota mayo clinic. And some of the biggest health
plans that are also going to likely be partners on
this innovation are like UnitedHealth in in Minnesota or H
. D. A. And in Nashville Tennessee.
So that's why you're starting to see this broaden out
and you're right the cities that are rising have some
expertise, some history in terms of the industries that
have powered that city that are now being reimagined and
reinvented uh and and rather than have that disruption just
happened in Silicon Valley now it's happening in these cities
all over the country, seeing that in L.
A. We're seeing that Dallas, we're seeing that
Nashville, seeing that here in Washington D. C
. We're seeing that and so some of the cities
that outside of Silicon Valley get a lot of tension
like Seattle and in Austin more recently a Miami that's
great that they're getting all the attention. The real
story here is it's dozens of cities that are rising
right and really thousands of companies that are really rising
and that's why this landscape around innovation is changing and
really will look quite different I think 10 years from
now, how do you expect cities to then use
this data and sweeten the deal for companies to grow
out and add to essentially the economic footprint that that
city may have in the future knowing the number of
jobs, knowing the number of dollars that may continue
to move in and around that city and thus creating
even more potential for that city to continue to grow
out and add more opportunity. And even some of
the other larger companies that may come in the future
too. Well I think cities recognized this is the
moment and it was building pre pandemic but certainly is
accelerated because of the pandemic almost to shake the snow
globe moment. And we're seeing a sort of the
break between where you work and where you live and
a lot of focus on remote work hybrid work that
creates opportunity for these cities. So the smart community
leaders of smart mayor has really recognized this as a
moment and really trying to win the battle for talent
tell the story of what's happening in their city,
trying to win the battle for capitol, help back
the local angel investors and local regional venture capitalists as
well as try to attract some of the coastal investors
to back companies when they're really, uh, scaling
to do more partnerships locally to build more collaborative connective
tissue locally. So the university is working with the
startup community, is working with the large companies in
that, in that particular community. We're seeing this
now happen. And as I said, we've been
Visited with our bus 44 cities. Most of these
cities are recognizing this is a moment and really seizing
it. And that's why I think things are going
to change quite significantly over the next decade.