Drive Capital’s Comeback: How the Columbus VC Firm Thrived Post-Split
▼ Summary
– Drive Capital, based in Columbus, Ohio, returned $500 million to investors in May 2024, marking a significant liquidity event in the venture capital industry.
– The firm overcame internal upheaval after co-founder Mark Kvamme departed in 2021, with Chris Olsen leading Drive to success through a contrarian investment strategy.
– Drive focuses on backing companies outside Silicon Valley, often as the sole venture investor, with average ownership stakes of 30% compared to coastal firms’ 10%.
– The firm has notable successes like Duolingo and Vast Data but also faced failures like Olive AI, highlighting the risks of venture investing.
– Drive’s thesis on Midwest tech hubs gained validation with Erebor, a crypto-focused bank backed by tech billionaires, planning to launch in Columbus.
Venture capital firms often overlook the Midwest, but Drive Capital has proven that exceptional returns can come from unexpected places. The Columbus-based firm recently made headlines by returning $500 million to investors in just one week, demonstrating remarkable resilience after a high-profile co-founder split that could have derailed its trajectory.
Drive’s success stems from a contrarian approach in an industry obsessed with unicorns. While many investors chase billion-dollar valuations, the firm focuses on steady, high-probability exits. “If you can consistently exit companies at $3 billion, you’re achieving something that happens every month,” says Chris Olsen, Drive’s sole managing partner. This strategy paid off with Thoughtful Automation, an AI healthcare company whose sale nearly returned an entire fund despite falling short of the coveted billion-dollar mark.
The firm’s portfolio reflects its Midwest roots, backing companies that apply technology to overlooked industries. From autonomous welding to next-gen dental insurance, Drive invests where coastal VCs rarely venture. Its early bet on Duolingo, made after a chance meeting with the founder in a Pittsburgh bar, has grown into an $18 billion public company. However, not every investment thrived; the collapse of Olive AI, once valued at $4 billion, serves as a stark reminder of venture capital’s inherent risks.
Drive’s geographic strategy sets it apart. With teams in six cities, including Austin and Toronto, the firm supports founders who might otherwise struggle to balance proximity to customers and investors. Olsen argues that startups outside Silicon Valley face higher scrutiny, forcing them to build stronger businesses from the outset.
The firm’s momentum raises questions about its next move. With 30% of its latest $1 billion fund still uninvested, Drive’s ability to sustain its track record remains a topic of interest. Meanwhile, Columbus’s emergence as a tech hub gained further credibility with the announcement of Erebor, a crypto bank backed by Peter Thiel and other industry heavyweights.
Drive’s journey underscores a broader shift in venture capital. As Olsen puts it, “When we started, people thought we were nuts. Now, even Silicon Valley’s elite are looking beyond the coasts.” Whether this trend continues, one thing is clear: Drive Capital has carved out a unique niche in an industry that often favors the familiar.
(Source: TechCrunch)
