The venture capital landscape has always had a rollercoaster relationship with the Midwest. Investors often flock to the region during boom times, only to retreat back to the coasts when markets cool. For Columbus, Ohio-based Drive Capital, this cycle of attention and indifference has played out amidst its own internal shakeup a few years ago—a co-founder split that threatened to derail the firm but ultimately may have made it stronger.
This past May marked a significant milestone for Drive Capital and the broader venture scene. The firm managed to return an impressive $500 million to investors in just one week, distributing nearly $140 million worth of Root Insurance shares shortly after cashing out of Austin-based Thoughtful Automation and another undisclosed company.
Some might see it as a stunt, but limited partners were likely pleased. “I don’t know of any other venture firm recently achieving that kind of liquidity,” said Chris Olsen, Drive’s co-founder and now sole managing partner, speaking from the firm’s offices in Columbus’s Short North neighborhood.
This achievement signals a notable turnaround for a firm that faced existential questions just three years ago, when Olsen and his co-founder Mark Kvamme—both former Sequoia Capital partners—went their separate ways. Kvamme eventually launched the Ohio Fund, a broader investment vehicle aimed at boosting Ohio’s economic growth through real estate, infrastructure, manufacturing, and technology investments.
Drive’s recent success is rooted in what Olsen describes as a deliberately contrarian approach, especially in an industry obsessed with “unicorns” and “decacorns”—companies valued at $1 billion and $10 billion, respectively.
“If you listen to the news or chat at Sand Hill Road, everyone’s talking about $50 billion or $100 billion outcomes,” Olsen explains. “But the truth is, those huge outcomes are incredibly rare. Over the past 20 years, there have only been 12 companies in the U.S. valued over $50 billion.”
In contrast, Olsen points out, there have been 127 IPOs at $3 billion or more, along with hundreds of M&A deals at that level. “Exiting companies at $3 billion is something that happens every month,” he says, emphasizing that steady, smaller-scale successes can be just as valuable.
This mindset underpins Drive’s exit from Thoughtful Automation, an AI healthcare automation company sold to private equity firm New Mountain Capital, which merged it with two other firms to create Smarter Technologies. Olsen highlights that Drive owned “multiples” of the usual Silicon Valley stake—around 30% on average, compared to the typical 10%—often because it’s the sole venture investor across multiple funding rounds.
“Out of our portfolio, about 20% of the companies we invest in are the sole venture firm involved,” Olsen notes.
Drive’s portfolio showcases both wins and setbacks. The firm was an early backer of Duolingo, investing when it was still pre-revenue after Olsen and Kvamme met founder Luis von Ahn at a Pittsburgh bar. Today, Duolingo trades on NASDAQ with a valuation nearing $18 billion.
They also invested in Vast Data, a data storage platform valued at around $9 billion in late 2023, and made profitable moves with Root Insurance despite its challenging public market performance since its IPO in late 2020.
However, Drive experienced a major setback with Olive AI, a Columbus-based healthcare automation startup that raised over $900 million and was valued at $4 billion before selling off parts of its business in a fire sale.
What sets Drive apart, Olsen argues, is its focus on building companies outside Silicon Valley’s fiercely competitive ecosystem. The firm now has team members in six cities—Columbus, Austin, Boulder, Chicago, Atlanta, and Toronto—and actively seeks founders who want to grow their businesses near their customers, not just near investors.
“That’s our secret sauce,” Olsen says. “Startups outside Silicon Valley face higher hurdles—they need to be better businesses to attract venture funding. The same applies to us. For us to invest in a Silicon Valley company, it has to meet a higher bar.”
Interestingly, while many VCs chase revolutionary ideas, Drive often invests in applying technology to traditional industries. For instance, they’ve backed an autonomous welding company and what Olsen calls “next-generation dental insurance”—sectors that make up a significant part of America’s $18 trillion economy beyond the typical tech realm.
As Drive continues to grow, questions remain about whether it will raise a new, larger fund. Currently managing assets from funds raised when Kvamme was involved, Olsen says they have about 30% left to invest from their latest $1 billion vehicle, announced in June 2022.
Regarding returns, Olsen reports that with $2.2 billion in assets under management across all funds, Drive’s investments are performing well—“top quartile” funds with over four times net returns on their most mature funds, and growth continues.
Meanwhile, Drive’s belief in Columbus as a genuine tech hub received further validation when notable tech figures like Palmer Luckey and Peter Thiel announced plans to launch Erebor, a crypto-focused bank headquartered in Columbus.
“When we started Drive in 2012, many thought we were crazy,” Olsen recalls. “Now, some of the smartest minds in tech—whether it’s Elon Musk, Larry Ellison, or Peter Thiel—are moving out of Silicon Valley and establishing major presences in other cities.”
Drive Capital’s journey exemplifies how strategic, contrarian investing and a focus on overlooked regions can lead to remarkable success in the ever-evolving world of venture capital.
