Tom Walker revs up Columbus’ entrepreneurial ecosystem at Rev1 Ventures

 

Rev1 Ventures President and CEO Tom Walker scratches his head when he reads about a community that declares it’s going to be the next Silicon Valley.

He says it can’t be the next Silicon Valley because it doesn’t have the same assets. The assets that Silicon Valley built upon are exclusive to that region.

“Every region is unique, and so you have to build out of what is in your own soil,” he says.

Walker developed a startup support program in Oklahoma and set up entrepreneurship centers around southeast England before he was recruited to Columbus. The board of Tech Columbus was looking for someone who could set a strategy and build a company around growing the Central Ohio startup sector.

Each time he’s cultivated startups, Walker has followed the same principles. He looked at the region and assessed the assets, while identifying gaps that could be filled.

“For a startup and an entrepreneurial economy to thrive, the more you can connect those assets in your backyard, the better the early stage companies will thrive,” he says.

When Columbus called, Walker wasn’t considering leaving Oklahoma, but he was intrigued by the leadership that wanted to throw its support behind entrepreneurs with early stage companies.

“The recruitment team were CEOs of some of the largest companies or institutions in town,” Walker says. “And that spoke volumes around the collaboration that was here and the potential for more collaboration.”

After arriving in late 2012, he identified the region’s core assets — proximity to top universities and research institutions and a dense Fortune 1,000 base. Walker also assessed gaps in the startup support initiatives and found that entrepreneurs needed help attracting talent and capital.

“We did have an impressive angel network, the Ohio TechAngel Fund — that really was the main capital strategy — and so we wanted to build additional capital sources from that for entrepreneurs,” Walker says.

Rev1 Ventures — and its first seed fund — was born in 2014 out of those strategic efforts. Its goal was to create $2 billion in economic impact in Central Ohio by the end of 2019.

One-two punch

Tech Columbus hosted networking events for the technology and chief innovation officer communities and provided other services. Today’s rebranded Rev1 is more focused, operating as a hands-on investor studio that focuses on early stage, high-growth startups.

“I launched my first fund in 1999. I’ve been part of that investment world for a long time, and I’ve always believed that, in supporting entrepreneurs, the best one-two punch is providing the advisory services with capital,” Walker says.

A recent investor from California had a good analogy to describe the process, he says. You put the bumper rails up and let entrepreneurs find their own way through, rather than dictating to them.

Rev1 invests from the concept stage to a Series A round. Its portfolio startups have about 50 percent survivability rate after five years, and Walker says that rate would be lower without so much support surrounding the companies.

“We target standard returns for equity investments, but we’re really early, so our risk profile is a little higher. And then we also invest in a certain region, so that increases the risk profile a bit as well,” he says.

About half the deal flow is software IT, which has a core of data analytics. About 30 percent of the deal flow is life science startups that come from Nationwide Children’s Hospital, OhioHealth or The Ohio State University. The remaining 20 percent are food and agricultural science, advanced materials and energy companies.

Rev1 also emphasizes diversity, putting its team and the portfolio teams through inclusion training and doing outreach. About 48 percent of Rev1’s portfolio has a diverse founder or leader, which Walker says is high for the industry.

Today, Rev1 has roughly $90 million of capital under management. The organization syndicates every deal with co-investors, and last year Rev1’s portfolio raised capital from about 14 states.

Because there’s not enough organized capital in Ohio to fund the portfolio companies, Rev1 spends time outside the state working with other investors or acting as a connector for investors who come in to Central Ohio.

“When you’re growing an economy, it’s important to not put too many walls around your own region because it’s a global economy, at the end of the day,” Walker says.

Rev1 also works with community partners and is plugged into a strong referral network.

“If we met a company that is not a technology company, it just doesn’t fit our model, we have somebody to refer them to,” he says. “Those networks meet on a frequent basis, and we’re communicating back and forth. I think there’s always room for improvement, but everybody knows who the players are and is in it to grow this region.”

Board member Pamela Springer, who also is president and CEO of the startup ORIS Intelligence, believes Rev1’s well-executed vision and its team of pros who help startups figure out how to get going are attracting outside attention.

“They’ve played a significant role in the acceleration and visibility that Columbus is now getting,” she says.

Partner mentality

Rev1 puts on targeted programs that introduce startups to the community’s corporate base — again tying everything back to the assets in your backyard. But the organization’s relationship with corporations has evolved.

While trying to nurture advisory relationships between startups and corporations, which sometimes result in investment, Walker says Rev1 began advising its corporate partners on innovation strategy. This includes relationships like the one with The J.M. Smucker Co. that began in 2018.

“We believe in the partner mentality,” he says. “We can help corporations launch their innovation programs, and instead of them having to hire their own investment team, they can partner with us to manage those programs for them.

“It’s a terrific strategic relationship for us because it helps secure Rev1’s base here in the region. And at the same time, we’re helping our corporate partnerships grow. The end result is we’re attracting innovations and entrepreneurs to the region. Net net, it’s a big win.”

Three of Rev1’s eight funds are corporate venture funds, including a $25 million venture State Auto Labs Fund founded in 2017. While these funds don’t always invest directly in Central Ohio startups, everything ties back to growing the region.

For example, the Research Institute at Nationwide Children’s Hospital has a fund through Rev1, which invests in companies that are spinning out technologies in which much of the work continues back at the institute. Walker says it’s an example of growing the overall innovation base and attracting other entrepreneurs to the region.

In addition, Rev1 helps entrepreneurs with talent acquisition, customer acquisition, strategic planning, building a board, etc., using its large mentor network to quickly pull in resources.

“Part of our motto is, ‘Share bad news and share it early,’ so we can all be on the same page to help. That’s pretty ingrained in a lot of the entrepreneurs that we fund, so we’re working on these things proactively,” Walker says.

That partner mentality stretches to the startups themselves. Entrepreneurs have formed meetup advisory groups of their own initiative. Resident startups in Rev1’s 68,000-square-foot facility may find themselves working together. And, Walker says, there are sometimes collisions between software IT and life science companies that result in collaborations.

Walker started the region’s assets on a journey of connecting and collaborating in new ways to build the Columbus startup ecosystem. And those connections, collaborations and partnerships are still building momentum as Rev1 closes on its goal of $2 billion in economic impact.

The work, however, is not done.

Walker says there’s a continued need to attract capital and talent, while also updating the core infrastructure with more wet labs and facilities for software IT and biotech companies.

But even as the region strives to improve, it’s a good time to be an entrepreneur in Central Ohio.

“This has been a terrific year in Columbus for startups,” says Walker of 2018. “There’s been more capital attracted to portfolio companies than ever before. So that’s great. And we’ve also had some nice exits this year. Companies growing and fulfilling the dream of the exit.”

 

Rev1 Ventures provides help at …

“All of the different stages of a company’s lifecycle. We started working with them when they were Tech Columbus, and we think the world of Tom and his team and the transformation that happened when they became Rev1. A lot of the service offerings really expanded at that point.”

–Mike Morgan, CEO, Updox

Rev1 Ventures’ impact is accelerating …

“And that’s due to the new leadership that Tom brought in and transitioning to Rev1. It was a multifaceted organization that did a lot of things, more of a Swiss Army knife, to now a laser focused organization that has put all their resources and energy into helping flesh out early stage ideas.”

–Pamela Springer, president and CEO, ORIS Intelligence; board member, Rev1 Ventures

 

Rev1 Ventures has taken …

“A holistic approach to say, ‘This isn’t about just a 10-week program. We’re going to take talented teams and surround them with resources for talent. We’re going to connect them with corporate entities that can buy their product. We’re going to provide them with the capital to help them grow more quickly and the office space to do it and discounted services to get them off the ground.’ They’ve done a nice job of bringing that whole package together — and doing it over an extended period of time.”

–Phil George, CEO, MentorcliQ

 

In 2017:

  • $201M in capital attracted and revenue generated to Rev1-assisted companies
  • 31 companies funded
  • $8.2M in funds deployed
  • 218 technologies assessed. 15 spinouts funded with $2.6M
  • 156 entrepreneurs educated in learning labs
  • 20 companies achieved more than $1M in revenue
  • 21 companies raised more than $1M in funding
  • 400+ events held