Drive Capital investors hit a crossroads • TechCrunch

Drive Capital was founded by two former Sequoia Capital Partners looking to start over in the Midwest. But investors in the company based in Columbus, Oh. It’s been a bumpy ride lately, and according to our sources, they don’t like it.

It’s a spectacular turnaround for Drive, which announced a $1 billion capital commitment in June, a fair amount for a 10-year-old company tasked with investing in most anywhere in the United States outside of Silicon Valley. In fact, in June, the company – co-founded by veteran venture capitalists Mark Kvamme and Chris Olsen – appeared to be on the upswing, with a few clear wins and a news fund that has brought in Drive assets back to more than $2 billion.

However, since September – right after we talked to Olsen about VC double back to California – we’ve heard rumors of a rift, along with separate plans Kvamme is working on. Then there was the announcement last month that the group would split.

At first, the story was that Kvamme, who had worked at Sequoia twice as much as Olsen, was switching to an “honorary partner” because, as he told the regional outlet, Columbus first business, 10 years and four funding cycles longer than his original plan to lead Drive Capital. (This is news for Drive investors.)

This week, the other shoe fell. Columbus first business reported that Kvamme, who racing. public stocks, private companies in Ohio and infrastructure. The idea is to “focus on Ohio’s future economic vitality,” said an unnamed source.

Now Olsen says he’s surprised by the development. We received a letter that Drive sent to its limited partners tonight that says:

Dear limited partner:

This week, an article was published indicating that our Honor Partner Mark Kvamme is launching a new investment fund. All of us at Drive are amazed by this news, and we’re sure you are too. While we won’t send you notes every time a new article about Mark is published, we feel that in the spirit of being a good partner, providing you with transparent updates about this situation and our relationship with Mark was the right one.

After the article was published, we spoke to Mark and learned that his ability to raise new funds was revealed to a journalist from an unknown source. According to Mark, he has not yet determined what he will do next. Raising a new type of fund is something he’s considering, along with other options in public service and personal endeavours.

We have a formal separation agreement with Mark that prevents him from starting a company that competes with or sponsors Drive. Please know that this is a carefully negotiated agreement to ensure that it substantially protects Drive, the interests of our Limited Partners, and everything we are building at Drive.

Again, it’s not our intention to contact you every time a new article is written about Mark, but in this case, we think it’s appropriate to provide clarification. If you have any questions, please feel free to contact [contact information redacted by TechCrunch].

Best regards,
Driving team

Olsen declined to comment for this story; We contacted Kvamme and received no response. But it’s complicated, to say the least.

According to our sources, part of the trace of the split stems from the relationship between Olsen and Yasmine Lacaillade, who served as Drive’s COO for nearly seven years before leaving the company in April to launch the site. its own investment.

When asked about this, a spokesperson for Drive downplayed any tensions that might arise from the romantic relationship between the two, writing: “Yes, you heard right that Chris and Yas are having a relationship. emotional relationship. It was public knowledge for a while. No comment other than that.”

Like most venture capital firms today, Drive also finds its portfolio tougher than it did a year or two ago. One of Drive’s biggest exits to date has been that of Root Insurance, an insurance company based in Columbus, Oh., now seven years old, that specializes in auto insurance and has organized a round. Traditional IPO in November 2020. While the stocks performed well at first, they’ve since dropped in price, now priced at about $7 per share following a reverse stock split, down from $486 a share on press day. company to go public. Olsen left the board last November.

The other big star in Drive’s portfolio right now – Olive AI – is trying to overcome its own challenges. The Columbus-based healthcare automation startup, founded in 2012, has long shaped its extensive pivoting history (more than 30 times to date) as a traditional story. Inspiration about trying, then trying again. Olive is also rewarded by investors for its willingness to change direction. It has raised a staggering $902 million over the years and said last year it was valued at 4 billion USD.

But the outfit was never all it appeared to be, according to a series Damn Axios piece, and by September, the wheels quickly loosened. Most notably, the company’s chief financial officer and chief product officer were abruptly laid off, with many C-level executives leaving this fall, including the president, chief executive officer, and CEO. senior executive, the company’s vice president of operations, and the company’s vice president of payments. Product strategy.

Olive AI has since said it will sell part of its products and services to Rotera, a company that was formed from Olive’s venture studio.

The limited partners are not happy about these collective developments, but as far as we know, they have not talked about taking action and it is unlikely that they will act.

First, it is extremely rare for partners to restrict their organization against a joint venture to which they have committed capital, and is only slightly more common for VCs to expand LPs by shrinking their commitments. surname.

They can expect that Olsen will land on his feet. He has 16 years of venture capital experience and has about 20 employees at Drive.

Furthermore, there was not much interest in causing headaches for Kvamme, who bordered on VC royalty. (His father was a partner at Kleiner Perkins; his first wife was the daughter of another prominent VC, former Sequoia Capital partner Pierre Lamond.)

Kvamme was very connected in Ohio, after initially being lured there by his longtime friend John Kasich to take a job in economic development. He may also have political ambitions of his own. Indeed, a recent regional investor told Business Insider that Kvamme may be launching a fund to boost Ohio’s economy as the basis for a future campaign.

There is a playbook if so. Investor JD Vance founded a Cincinnati venture company called Narya in late 2019 before announcing his candidacy for the Senate about a year and a half later. In late September, according to, Kvamme co-organizer one of the fundraisers helped Vance win that race earlier this month.

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