Two ex-Sequoia Capital Partners formed Drive Capital to start a new business in the Midwest. Our sources tell us that investors in the Columbus, Oh.-based firm have had a rough ride recently.
In June, Drive announced $1 billion in capital commitments, a healthy amount for a 10-year-old firm whose mission is to invest almost everywhere in the U.S. In June, Drive had a couple of wins and news funds that brought its assets under management to more than $2 billion.
We heard about a rift and separate plans that Kvamme was making after we talked with Olsen. The team was going to split up last month.
At first, the story was that Kvamme was transitioning to partner emeritus because 10 years and four funding cycles was longer than he originally planned. It was news to Drive's investors.
The other shoe fell. According to Columbus Business First, Kvamme is talking with potential backers about a new fund, the Ohio Fund, which will invest in multiple asset classes, including public stocks, private companies in Ohio. An unnamed source told the outlet that the goal is to focus on the future economic vitality of Ohio.
He said that he was surprised by the development. Drive sent out a letter to its limited partners this evening.
This is a letter to the limited partner.
Mark Kvamme is launching a new investment fund according to an article. We were all surprised by the news. We will not send you a note every time there is a new article about Mark, but we will give you a transparent update about our relationship with Mark in the spirit of being a good partner.
Mark told us after the article was published that he was going to raise a new fund. Mark doesn't know what he will do next. He is considering raising a new type of fund and other options.
Mark can't start a firm or fund because of a separation agreement we have with him. This agreement was heavily negotiated to make sure that it protects Drive, our limited partners interests, and everything we are building towards at Drive.
We don't want to communicate with you every time a new article is written about Mark, but in this instance, we thought it was appropriate to give clarification. Please don't hesitate to contact us if you have any questions.
It has been sincerely.
The drive team is made up of people.
We reached out to Kvamme, but did not hear back. It is complex to say the least.
Our sources tell us that part of the split is due to a relationship between the two of them.
The Drive spokesman said that there were no tensions between the two because they were in a relationship. For a while, that has been public knowledge. Comments beyond that are not allowed.
Drive's portfolio is in worse shape than it was a year ago. One of the biggest exits to date has been that of Root Insurance, a Columbus, Oh.-based insurance company that specialized in automotive coverage and staged a traditional IPO in November 2020. After a reverse stock split, the shares are currently priced at $7 each, down from $486 per share when the company went public. He left the board in November of last year.
Olive AI is one of the big stars of Drive's portfolio. The Columbus-based healthcare automation startup has long framed its history of pivots as an inspiring tale of trying and trying again. Olive was rewarded for shifting gears. Last year it said it was worth $4 billion and raised $902 million.
The outfit was never all that it looked like, and by September the wheels were starting to loosen. A number of C-level executives left the company this fall, including its president, a senior director of operations, and its VP of operations.
Olive said it will sell a portion of its products and services to the company.
As far as we know, limited partners have not talked about taking action and it is unlikely that they will.
It is extremely rare for limited partners to organize against a venture firm to which they have committed capital and only slightly more common for VCs to extend limited partners.
They may think that he will land on his feet. He has 16 years of investment experience and a staff of 20.
There isn't much interest in making headaches for Kvamme. His father was a partner at Kleiner Perkins and his first wife is the daughter of a famous VC.
John Kasich recruited Kvamme to take an economic development job in Ohio. He might have political ambitions of his own as well. One regional investor recently told Business Insider that Kvamme may be launching a fund meant to bolster Ohio's economy as a way to prepare for a future campaign.
If that's the case, there is a way to get around it. The investor set up a venture firm in Cincinnati called Narya in late 2019. According to Cleveland.com, Kvamme co-hosted one of the funds that helped Vance win the race.
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