Drive Capital Helps Build Technology Future In Columbus

VC cofounder Kvamme believes digitization of industry increasingly favors Midwestern outposts like Ohio capital.

Drive Capital is beefing up the technology chops of central Ohio one startup at a time. And in the midst of the digital transformation of business across America and throughout the world, the co-founder of the Columbus-based venture-capital firm believes his region is reaching the critical mass to become a global player.

Mark Kvamme thinks Columbus has an edge in part because of its legacy industries such as insurance, in part because of its location, in part because of its educational advantages – and certainly in part because he and Drive Capital set up shop in the city eight years ago with the determination to help the region achieve that world-class objective.

“We’ve got one of the largest concentrations of insurance companies” in Ohio, Kvamme told Chief Executive, “and as venture capitalists and technologists, we’ve taken advantage of that” by nurturing and launching a number of insurance-related startups. “All industries are becoming digitized.”

Columbus is “close to the customer” in just about whatever industry can be mentioned, he noted. “If you put a pin in Columbus on a map and look within one long car drive, you can hit about 60 percent of the GDP of the United States and about half the population.”

And, Kvamme said, “People forget that the Midwest graduates more computer-science engineers than any other place on earth.” Not only does the roster of stellar universities include Ohio State in Columbus but also other Big 10 schools, Carnegie-Mellon University in Pittsburgh and others. “In Silicon Valley, you just have Stanford and Berkeley.”

Kvamme’s father is E. Floyd Kvamme, one of the co-founders of National Semiconductor. And, he said, “When Don Valentine started Sequoia Capital, we were family friends.” So Mark Kvamme spent his first 50 years in Silicon Valley, “watching it grow from cherry and apricot orchards to a force that ushered us into the silicon age,” as he says in his online bio.

Then Kvamme moved to Columbus because he believes “the next technological transformation” will happen in the “consumer packaging, manufacturing, insurance, and healthcare services companies of the Midwest.”

The world has started to catch up with Kvamme’s notion to some extent, especially in the wake of the geographic disruption by the pandemic that has many companies and people seeking to exit big cities on the coasts – either to resettle in those cities’ surburbs, or as far away as flyover country.

When he and co-founder Chris Olsen launched Drive Capital, “People thought we were literally crazy to start a venture-capital firm in the Midwest focused on technology,” Kvamme told Chief Executive. “‘Mark,’ they said, ‘the Midwest is where VCs go to die.’ But what’s changed now is that everyone is talking about it. So if you do it, actually now it’s cool, versus crazy.”

Still, Kvamme said the Midwest isn’t seeing fleets of moving vans coming in from the coasts. There are all sorts of reasons why, including the fact that venture-capital funding – to fuel the startups required to swell technology enterprises and even legacy transformation in the heartland – still remains almost completely the province of coastal companies.

“We did a study recently that concluded there’s no more venture capital funding coming out of the Midwest than there was seven years ago,” Kvamme said. “It’s exactly flat at about 6.5 percent. Meanwhile, 85 percent of venture capital still comes from three states: California, New York and Massachusetts. Even though the dollars going into VCs are much higher now.

“It just takes time. And we have to show success. We have to show more billion-dollar exits in the Midwest, and once you see more, more of it will happen. And with Covid, and the cost of living and quality of life in Silicon Valley now, more people have been working remotely and discovering that places like Dallas and Columbus and other places out here are pretty nice. It’s opened people’s eyes to the possibilities.”