Rev1 & Huntington: Funding Columbus, Ohio’s economic growth
Rev1 Ventures scales startups and corporate innovations by connecting the dots in Columbus
Ranked among the nation’s top regions for startup growth, Columbus buzzes with entrepreneurial activity. Whether innovation arises from research institutions such as The Ohio State University and Nationwide Children’s Hospital, or from a strong corporate base including 14 Fortune 1000 companies, or from an entrepreneur’s clever invention, Central Ohio teems with startups. And these businesses need access to the right resources at the right time to successfully scale their growth. That’s where Rev1 Ventures comes in.
“We help entrepreneurs and companies accelerate their growth by achieving their first key milestones – the first round of capital, the first version of the product and the first revenue,” says President and CEO Tom Walker. Walker doesn’t describe Rev1 as a startup accelerator, incubator, or investor, but as an “investor startup studio” that blends together a continuum of capital and strategic services to propel companies toward success.
“We have the goal, by the end of 2019, to provide a $2 billion impact in our region, which we calculate by the revenue our startups generate and the capital they attract to our region.” —Tom Walker, president and CEO, Rev1
Investing in innovation
Rev1 was formed in 2014 to address two main gaps in Central Ohio’s entrepreneurial ecosystem: capital and talent. “The first was the capital gap – in particular, in the earliest stages of a company’s formation,” Walker says. “We saw there wasn’t a great deal of organized capital for concept-stage to early-stage businesses, so we focused on finding, growing and managing funding sources to provide entrepreneurs with a continuum of capital.”
As one of the most active investors in the Great Lakes region, Rev1 manages funds targeted at companies in various stages of growth, starting with concept investments that range from $25,000 to $250,000. These early investments help companies get critical market feedback to refine their product and business model for the marketplace.
The next level is seed funding of up to $500,000, followed by early stage funding of up to $1 million, which is typically used to grow startups by building management teams and refining products to perpetuate growth. Rev1’s diverse portfolio supports startups in high-growth industries including agriculture and food science, software/IT, insurance technology, advanced materials, alternative energy, and life sciences (which makes up 30 percent of the organization’s deal flow). Rev1 invests in approximately 20 companies every year, and in 2018, the organization will invest in its 100th startup.
Creating startup and corporate connections
Rev1 has more than $90 million in capital under management, providing a capital continuum from corporations and the community, as well as the Ohio Third Frontier.
“We’re fortunate to have 50 corporate and community supporters that believe in the Columbus startup community and fund us to work with them,” Walker says. Huntington is one of those organizations that has long invested in Rev1 and in the broader entrepreneurial economy of Central Ohio. “Huntington has been a trusted long-term supporter; they’ve been very committed,” Walker says. “They’ve really helped us grow these services by helping fund the work that we do. They’re very hands on, and we like that kind of involvement with our corporate donors, because that’s how you drive relationships forward.”
Although startup success requires capital, it’s not just about the money. Rev1 combines funding with a comprehensive suite of strategic services designed to minimize the risks faced by startups by connecting them with the tools, skills and resources required to scale growth. “What goes hand-in-hand with funding startups is, how do you help a one- or two-person entrepreneurial team augment their talent with limited resources?” Walker says. “That speaks to the talent we’ve recruited to our team to help companies at the earliest stage, and it speaks to the hands-on services we’ve designed to provide to these teams so they can grow their business.”
Rev1’s team of 32 employees is composed of former entrepreneurs, investors and startup advisers who leverage decades of experience to help startups navigate common challenges. “We have a process that’s very robust, and it focuses on five key areas of business,” Walker says. “We offer services along those five areas to help entrepreneurs grow the company from one stage to the next.”
Those five pillars are delivering a differentiated product, identifying the right market, forming a viable business, building an effective team, and long-term capital access planning. Rev1 offers Learning Labs that cover topics in each of these areas, in addition to services such as financial modeling, capital planning and market research to help startups accelerate through each stage of growth. Rev1’s entrepreneurs and advisers work with closely with startups, “walking hand-in-hand and working through key business milestones,” Walker says. “We help identify what gaps they need help with, and if we can’t fill them, we’ll bring in people from our network to help a company achieve its goals.”
Rev1 claims one of the largest service provider networks of any startup studio in the country. The organization works with nearly 40 professional service firms that offer legal, accounting, marketing, engineering and similar services to startups, at an initially discounted rate. “There is something special about the Columbus community that has helped us pull all these services together,” Walker says. By acting as a hub of entrepreneurial growth, Rev1 connects new businesses to the capital sources and startup resources that Columbus has to offer.
“We help entrepreneurs and companies accelerate their growth by achieving their first key milestones – the first round of capital, the first version of the product and the first revenue.” —Tom Walker, president and CEO, Rev1
Space to collaborate
Also differentiating Rev1 is its 62,000-square-foot innovation center that houses, at present, 52 startups of various sizes, industries and stages of development. “There’s a lot of natural networking that happens by being in the facility together,” Walker says. “Companies have access to our team day to day, but they also have access to the other entrepreneurs and innovators in the building. There’s a lot of collaboration that occurs, and everyone’s feeding off of one another.”
Rev1 promotes a steady churn in the building to keep innovation flowing. Occupancy rolls over at about 40 percent annually, with an average tenancy of about two years. The organization doesn’t like to call itself an incubator, though, because occupancy isn’t required for companies to benefit from Rev1’s guidance. Rev1 also works with established corporate innovation teams to drive entrepreneurial thinking, helping corporations embrace disruptive technologies to stay on the forefront of their industries. “Collaboration is key to success,” Walker says. “That’s how we’re growing our corporate innovation supporters, as well as startups in the region.”
To date, Rev1 has invested in more than 80 companies and secured more than $90 million in capital. Its portfolio is growing revenue at an average rate of more than 100 percent annually, generating $111 million in revenue last year and creating and retaining more than 1,000 jobs. In fact, Rev1’s portfolio companies raised $90 million in capital last year.
“We have the goal, by the end of 2019, to provide a $2 billion impact in our region, which we calculate by the revenue our startups generate and the capital they attract to our region,” Walker says. “Today we sit at about $1.4 billion. Our portfolios are growing in revenue and jobs, and they will attract capital to the region and return capital to investors and to themselves.” In that sense, growth at Rev1 and its portfolio companies means growth for Columbus. The organization and its supporters work to scale high-growth companies that attract capital and talent to the city, perpetuating an ongoing cycle of regional growth.
For more information, visit www.rev1ventures.com.