Two ex-Sequoia investors who ditched Silicon Valley for Ohio raised a $350 million fund to bring venture capital to America's heartland

• Drive Capital, a venture capital firm based in Columbus, Ohio, has raised a $350 million fund to invest in Midwestern startups.
• The firm's founders came from venture capital powerhouse Sequoia Capital and moved to find new opportunities.
• While most U.S. venture capital investment ends up in California, about three-quarters of Drive Capital's portfolio companies have headquarters in the Midwest.
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Drive Capital, a venture capital firm founded by Sequoia Capital alums and focused on investing in the Midwest, has raised a third fund to inject millions into the country's unlikely startup hub in the heartland.

Regulatory filings show the Columbus, Ohio, firm has closed $350 million for a third fund putting money into early-stage startups. It's raised another $284 million for a growth fund called OverDrive I. Crunchbase News and PitchBook first reported on the fundraise.

A spokesman for Drive Capital declined to comment on record because the firm hasn't closed its later-stage fund.

The firm's founders are a pair of Silicon Valley transplants who went searching for the best companies in the last place most investors look. Drive Capital has backed three dozen startups, according to PitchBook data, and about three-quarters of them have Midwestern headquarters. By comparison, California startups received more than half of venture capital spending in the United States in 2018.

Drive Capital's Ohio home highlights the spread of startups and tech investors beyond the confines of Silicon Valley, where the supply of engineering talent is tight and costs are high. The number of venture capital firms in Austin has grown in recent years, Business Insider recently reported, as a new crop of startups take root in the Texas city.

Columbus, a 3.5 hour drive from Detroit, has also attracted a rising number of funds to the Ohio capital. It benefits from a large state college creating a highly educated workforce, an affordable cost of living, and a slew of large employers - mostly insurance companies - that have started investment funds to support entrepreneurs.

Nearly a decade ago, Mark Kvamme left a high-paying job at venture capital powerhouse Sequoia to take a cabinet position with longtime friend and Ohio's newly elected Republican governor, John Kasich. He resigned a year later but invited a Sequoia colleague, Chris Olsen, to join him in the Midwest and build the next great investment firm.

Its biggest bets include Root Insurance, which offers rates based on how well you drive; language-learning app Duolingo; and Nowait, a restaurant reservation app that was bought by Yelp for $40 million.

The firm's 19 employees all relocated from the coasts, according to its website. They've flown a collective 1 million miles to meet entrepreneurs wherever they are.