Drive Capital investors reach a crossroads • TechCrunch


Drive Capital was founded by two former Sequoia Capital Partners looking to start over in the Midwest. But investors in the Columbus-based company have, oh, had a bumpy ride lately, and according to our sources, they’re not enjoying it.

It’s a dramatic turn for Drive, which announced $1 billion in capital commitments in June, a good amount for a 10-year-old company whose mission is to invest just about everywhere in the US outside of Silicon Valley. In fact, in June, the company — co-founded by veterans Mark Kvami and Chris Olsen — appeared to be a hit, with two visible gains in its portfolio and assets under management that have grown to more than $2 billion.

However it dated back to september – shortly after olsen was interviewed for a story We’ve heard rumors of a rift, along with separate plans Kvami was hatching. Then came the announcement last month that the team had split up.

At first, the story was that Kvamme, who logged more than twice as many years in a Sequoia than Olsen, was moving on to an “honorary partner” because, he told the regional outlet Columbus Business First, 10 years and four longer financing cycles than originally planned to lead Drive Capital. (This came as news to Drive investors.)

This week, the other shoe fell. Columbus Business First I mentioned that kvame who car racing, not turning semi-retirement but instead talking with potential backers about a new fund, the Ohio Fund, which will obviously invest in multiple asset classes, including other funds, public equity, Ohio private companies, and infrastructure. The idea is to “focus on Ohio’s future economic vitality,” an unnamed source told the outlet.

Olsen now says he was surprised by this development. We got a letter that Drive sent to its limited partners tonight that reads:

Dear Limited Partner:

This week, an article was published indicating that our partner emeritus, Mark Kvami, is about to launch a new investment fund. All of us at Drive were very surprised by this news, because we’re sure you were, too. While we won’t be sending you a note every time a new article about Mark is published, we feel it is, in the spirit of a good partner, appropriate to provide you with a transparent update on this situation and our relationship with Mark.

After the article was published, we spoke with Mark and learned that the possibility of him raising new funding had leaked to a journalist from an unknown source. According to Mark, he has not yet decided what he will do next. Raising a new type of money is something he’s considering, along with other options in public service and personal endeavors.

We have a formal separation agreement with Mark that forbids him from starting a competitive company or funding Drive. Please know that this is a heavily negotiated agreement to ensure that it deeply protects Drive, the interests of our limited partners, and everything we build in Drive.

Again, we don’t intend to reach out to you every time a new article about Mark is written, but in this case, we thought it appropriate to provide a clarification. If you have any questions, please do not hesitate to contact us [contact information redacted by TechCrunch].

sincerely,
Drive team

Olsen declined to comment for this story. We have reached out to Cavame and have not received a response. But it’s complicated, to say the least.

According to our sources, part of the divisive implications of a relationship between Olsen and Jasmine Laquilad, who was Drive’s chief operating officer for nearly seven years before leaving the company in April to launch her own investment group.

Asked about the matter, a spokesperson for Drive downplayed any tensions that might have arisen from a romantic relationship between the two, writing, “Yeah, I heard right Chris and Yas are in a relationship. It’s been public knowledge for quite some time. No comments then.” .

Like most venture groups right now, Drive is also finding its portfolio in tougher shape than it was a year or two ago. One of Drive’s biggest exits to date has been that of Root Insurance, a now seven-year-old insurance company based in Columbus, OH. Specializing in auto coverage and which staged a traditional IPO at November 2020. Although the shares initially performed, they have since fallen, at about $7 per share after a reverse stock split, down from $486 per share on the day the company went public. Olsen exited the board in November last year.

The other big star in Drive’s portfolio right now – Olive AI – is trying to overcome his own challenges. The Columbus-based healthcare automation company, founded in 2012, has framed its extensive history of hubs (more than 30 so far) as an inspiring story of trying, and then trying again. Investors rewarded Olive’s willingness to change course, too. It has raised $902 million over the years and said last year it was valued $4 billion.

But the outfit was never quite what it appeared to be, according to a series of Damned Axios PiecesBy September, the wheels were loosening fast. Most notably, the company’s chief financial officer and chief production officer were abruptly fired, following several C-level executives who also departed this fall, including the company’s president, chief operating officer, executive vice president of operations and senior vice president of payer. Product strategy.

Olive AI has since said it will sell a portion of its products and services to Rotera, a company built out of its Olive project studio.

The Limited Partners are not happy with these collective developments, but as far as we know, they haven’t talked about taking action and it seems unlikely that they will.

First, it is very rare for limited partners to organize against an investment firm to which they have committed capital, and very rare for VCs to extend liquidity providers by reducing their commitments.

They might also expect Olsen to land on his feet. He has 16 years of experience in venture investing and approximately 20 Drive employees to support him.

Moreover, there isn’t much interest in causing headaches for Kvamme, who borders on VC royalty. (His father was a partner at Kleiner Perkins; his first wife is the daughter of another famous VC, former partner at Sequoia Capital, Pierre Lamond).

Kvamme is very attached in Ohio, having originally been lured by his old friend John Kasich to take a job in economic development. He may have his own political aspirations as well. In fact, one regional investor recently Business Insider said that Kvamme may launch a fund aimed at boosting Ohio’s economy as the basis for a future campaign.

It is a rulebook that has been used effectively before. VC and author JD Vance started an investment firm in Cincinnati called Narya in late 2019 before announcing his Senate candidacy about 1.5 years later. In late September, according to Cleveland.com, Kvamme Jointly hosted A fundraiser for Vance, who won his race earlier this month.



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