AOL’s co-founder Steve Case is searching for the next big investment in places where venture capitalists by and large ignore. In his 35-ft big red bus, Case is scouring the middle of the U.S. with his $150 million “Rise of the Rest” fund, a money stream meant to flow to entrepreneurs in small to mid-size cities like Indianapolis, Detroit, and Birmingham. The goal is to jump start local economies, giving entrepreneurs often overlooked by traditional investors a shot at capital. Case has visited 38 cities and 26 states so far.
Case’s diagnosis of venture capital’s problem with geography is not an exaggeration, based on the most recent data from the National Venture Capitalist Association. According to the organization, about 60 percent of all venture capital investments in 2018 were afforded to people and companies on the west coast. New England and the Mid-Atlantic account for another quarter of venture capital dollars, meaning that 85 percent of venture capital’s big investments are concentrated on the coasts, completely bypassing most of the country. Only one-half of one percent of venture capital’s 2018 investments went to firms in the Midwest.