Drive Capital was founded by two former Sequoia Capital Partners looking to make a fresh start in the Midwest. But investors in the Columbus, Ohio-based company have been on a bumpy road lately, and our sources say they aren’t enjoying it.
It’s a dramatic shift for Drive, which announced a $1 billion capital commitment in June, and a healthy move for a 10-year-old company whose mission is to invest almost everywhere in the U.S. outside of Silicon Valley. is an amount. In fact, in June, the company, co-founded by veteran VCs Mark Kvamme and Chris Olsen, appeared to be doing well, with its portfolio and assets under management surpassing his $2 billion mark.
Still way back in September — right after we interviewed Olsen for the story — I heard a grunt about the rift, along with another plan Kvamme was making. And last month, the disbandment of the team was announced.
The first story was that Kvamme, who has more than twice as many years at Sequoia as Olsen, was about to transition to “Honorary Partner”. Columbus Business First, 10 years and 4 funding cycles, was longer than the original plan to lead Drive Capital. (This came as news to his Drive investors.)
This week, the other shoe fell off. Columbus Business First Kvamme reported: race car, rather than rushing into semi-retirement, is discussing a new fund, the Ohio Fund, with potential backers. The idea is to “focus on Ohio’s future economic vitality,” an unnamed source told the outlet.
Olsen now says he’s surprised by the development. Tonight I got the following letter that Drive sent to his partner Limited.
Dear Limited Partner:
This week we published an article that our Honorary Partner Mark Kvamme is launching a new investment fund. All of us at Drive were stunned by this news. I’m sure you were too. We do not send notifications every time a new article about Mark is published, but in the spirit of being a good partner we feel it is appropriate to provide a transparent update on this situation and our relationship with Mark. thinking about.
I spoke with Mark after the article was published and learned that the possibility of him raising new funding was leaked to journalists by an unknown source. According to Mark, he hasn’t decided what he’s going to do next. Raising new types of funding is something he’s considering, along with other options for public service and private endeavours.
Mark has a formal separation agreement that prohibits him from forming a competitive company or fund-to-drive. Please be aware that this was an agreement that took a lot of work to ensure that Drive, Limited his partner’s interests, and everything he sought to build with Drive were substantially protected. Please wake up.
Again, I’m not going to contact you every time a new article is written about Mark, but in this case I thought it appropriate to clarify. Please contact us. [contact information redacted by TechCrunch].
Olsen declined to comment for this story. I have contacted Kvamme but have not received a response. But it’s complicated, to say the least.
Our sources say part of the split can be traced back to Olsen’s relationship with Yasmin Lacayard, who was Drive’s COO for nearly seven years.
Asked about this, a spokesperson for Drive downplayed any tensions that may have arisen from the romantic relationship between the two, writing: It has been known to the public for some time. No further comments. ”
Like most ventures today, Drive’s portfolio is in rougher shape than it was a year or two ago. One of Drive’s biggest exits to date is for Root Insurance, a seven-year-old insurance company based in Columbus, Ohio. November 2020The stock initially performed well, but then plummeted, with the current price after the reverse stock split down from $486 per share on the day the company went public to about $7 per share. Olsen stepped down from the board last November.
Another big star in Drive’s current portfolio, Olive AI, is looking to overcome its own set of challenges. The Columbus-based healthcare automation startup founded in 2012 has long framed Pivot’s extensive history (more than 30 to date) as a compelling story of trial and error. rice field. Olive has also been rewarded by investors for its willingness to shift gears.It has raised a staggering $902 million over the years and last year saw a valuation of $4 billion.
But according to a series of articles, the outfit wasn’t just for looks. Abominable Axios Piece, and by September, the wheels had loosened rapidly. Most notably, the company’s chief financial officer and chief product officer were abruptly laid off, and a number of senior executives, including president, senior director of operations, vice president of operations, and senior vice president of payments, were sacked this fall. I have retired. product strategy.
Olive AI has since said it will sell some of its products and services to Rotera, a company formed out of Olive’s own venture studio.
Limited Partners aren’t happy with these overall developments, but as far as we know they haven’t discussed taking action and it seems unlikely they will.
First, it’s very rare for a limited partner to organize against a venture capitalized, and slightly rarer for a VC to scale back commitments and grow an LP.
They may also be counting on Olsen to land on his feet. He has 16 years of venture investing experience and Drive has about 20 staff to support him.
Plus, they’re less interested in bothering Kvamme, which is closer to VC royalties. (His father, he was a partner at Kleiner Perkins; his first wife, another high-profile VC and former partner at Sequoia Capital, is the daughter of Pierre Lamond.)
Kvamme has strong ties to Ohio after being lured into a career in economic development by longtime friend John Kasich. He may also have political aspirations of his own.In fact, investors in one region recently told Business Insider Kvamme may be launching a fund aimed at strengthening Ohio’s economy as a basis for future campaigns.
It is a playbook that has been used effectively before. VC and author J.D. Vance founded his Narya venture in Cincinnati in late 2019 and announced his Senate run about 1.5 years later. According to Cleveland.com, in late September, Kvamme Co-sponsored A fundraiser for Vance, who won a race earlier this month.