Revolution’s Rise of the Rest closes second $150M fund

There are a lot of companies outside Silicon Valley and Revolution helps in financial support. The investment firm was co-founded 14 years ago by entrepreneur-investor Steve Case. Today, it announced the close of its second Rise of the Rest Seed Fund with $150 million in capital.

Rise of the Rest funds start-ups outside of the biggest U.S. tech hubs with an aim to foster innovation and momentum in other places. Forbes has listed some of the investors of Case’s new fund. It includes Jeff Bezos of Amazon, Sara Blakely of Spanx, hedge fund manager Ray Dalio, Under Armour co-founder Kevin Plank, former Tennessee governor Bill Haslam, VCs Jim Breyer and John Doerr, and Apollo Global management co-founder Joshua Harris.

Some of the investors such as Bezos, Dalio, Breyer and Doerr backed the first fund too. Other like “Hillbilly Elegy” author J.D Vance who ran the first fund with Case has stepped back. Instead, longtime Revolution investor David Hall will manage the second fund. The first has stakes in 125 companies and barely a week passes without a start-up announcing funding from the Rise of the Rest team.

“Our average initial investment is around $500,000, but our strategy is to then carefully track companies in our portfolio so we can double down on those that show the most promise. Part of the reason we are raising this second fund earlier than anticipated is because there were so many companies that scaled and warranted follow on investment,” Hall said.

Rise of the Rest does not typically lead investment or take board seat. Instead, it makes a point to invest alongside regional VC’s. But with the second fund, it may increase its initial check size. A number of companies in the portfolio of the first fund were investments made by Case on his own. Those check sizes were comparatively smaller, closer to $100,000. He further said it is “too early” to share details of returns on the first fund but “the results to date have exceeded our most optimistic expectations.”

“It will take a number of years to see it all play out. But we have made initial investments at a faster pace than we originally anticipated,” Case noted. “We were once a lonely voice in the venture world in touting this regional investment opportunity and believe our results are a signal to investors on the coasts that there are opportunities to build valuable companies outside of those coasts. ”

For example Rise of the Rest has followed up on so far with Chatanooga, Tenn.-based FreightWaves that provides data for freight markets, and Raleigh, N.C.-based Pryon, founded by Igor Jablokov, the man responsible for the technology behind Alexa.

The company completed its eight Rise of the Rest bus tour earlier this year. It visited Orlando, the Florida Space Coast, Tampa bay, Miami and Puerto Rico. In total, the Revolution team visited 43 cities and logged more than 11,000 miles searching for start-up ecosystems. The ninth tour will be announced in early 2020.