Intro: Broadcasting live from the Business RadioX studio in Atlanta, Georgia. It’s time for Atlanta Business Radio, brought to you by Kennesaw State University’s Executive MBA program. The accelerated degree program for working professionals looking to advance their career and enhance their leadership skills. And now, here’s your host.

Lee Kantor: Lee Kantor here, another episode of Atlanta Business Radio. And this is going to be a good one. But before we get started, it’s important to recognize our sponsor, CSU’s executive MBA program. Without them, we wouldn’t be sharing these important stories. Today on the show, we have Managing Partner of Revolutions Rise of the Rest Funds, David Hall, Welcome.

David Hall: Hi, Lee. Thanks for having me. Great to be here with you. Excited to have this conversation.

Lee Kantor: Well, I’m excited to learn what you’re up to. For folks who aren’t familiar, can you share a little bit about your work Revolution’s Rise of the Rest Funds?

David Hall: Absolutely. Rise of the Rest is a venture capital firm. We’re based in Washington, D.C. we’re a little unique from most venture capital funds, and that our fund only invests in companies that are located outside of San Francisco, in the Bay area, New York City and Boston. Acknowledging that those three ecosystems are pretty self-contained for venture capital, but lots of markets and lots of big, big ecosystems. Cities like Atlanta, like Chicago, like Dallas, like Phoenix, have tons of incredible entrepreneurs and great thinkers, but have a dearth of early stage venture capital. And so we set out to change that through some of the work that we’ve been doing over the last decade and beyond at rise of the rest, to really bridge some of those funding gaps for Entrepreneurs and startups in those rising cities to help compete against the lion’s share of venture capital that goes to to those three markets.

Lee Kantor: Now you’re using the phrase venture capital, are you? When you say early stage venture capital, is that to you a synonym for angel investing?

David Hall: It’s a great question. We we fall sort of right immediately following. The world of venture capital encompasses angel investing all the way into late stage sort of pre-IPO financing. Our sweet spot of venture capital is early stage. We are a seed fund, a seed stage fund, and we typically invest after the angels, but before sort of the larger big venture capital funds come in and take the company public. We are truly what we like to be called as catalytic capital. That helps these companies go from their seed stage into their their growth stages of investing. So we want to come in after the founder has sort of launched the company after the proverbial napkin stage where angel investors come in. But once there’s a company that’s been formed, the founders have left their old jobs and they’re fully dedicated to this enterprise, and they’re really looking to, to to raise capital, to scale the business idea and continue to validate product market fit and the opportunities that they have to serve their customers.

Lee Kantor: So you’re helping them with that kind of escape velocity.

David Hall: That’s exactly right. We we like to help them sort of tease out product market fit. We like to work with them on go to market strategies. How do they connect with their customers and begin to generate those first couple of sales, which we typically see in most of our our portfolio companies. Those initial sales or deal are done by the founders themselves like they are founder led sales and a big, uh, a big, um, testament of our capital is leaning into getting beyond just founder led sales. How can they recruit more salespeople, uh, to come in and help, you know, really scale the business by by making sure that, you know, all of the revenue is not generated by just one person, for example.

Lee Kantor: Now, when you’re coming in and especially, I mean, rise of the rest, I’m assuming means that’s the rest of the country, not those three markets that you described. Um, are you kind of are there boots on the ground in these markets where you’re actually helping them and mentoring them and helping them make connections? Or is this just you’re giving them money?

David Hall: Uh, so so let me go back because I think, I think it’s helpful to talk a little bit about more of our origin. And when we started, our founder, um, is the the gentleman who was the co-founder of AOL America Online. And he started Revolution Rise of the rest after he exited the AOL Time Warner merger, post the AOL Time Warner merger, and really started to go around the country, having done some work with the Obama administration on jobs and competitiveness. And one of the things that that he saw, we saw when we were going around to a lot of these communities, is there needs to be more of a rallying cry for entrepreneurship. How do you build the next generation of fortune 1000 companies and make sure that that that those companies have a lot of geographic diversification, right. We’ve always known that talent has been evenly dispersed. But but the opportunity to build that next great company for the last generation or two has really been concentrated into some of those traditional tech hubs like San Francisco, like New York City, like Boston. And so what we started back in 2012 were these these tours which we called rise of the rest bus tours. We would go to cities and we would spend a day there convening with local leadership. We would convene with the big corporations. We would convene with the universities and really present to these folks, often for the first time, that, hey guys, there’s a startup culture in your city. It’s nascent and small and but growing quickly. And wouldn’t it be great for you to capture some of this lightning in a bottle and help support and nurture these startups as they continue to scale and rise so that they don’t pick up and, you know, you know, get get involved with the Silicon Valley venture capitalists and relocate all of that IP, all of that talent away from a great city like Atlanta and just pocket it into the Bay area, which is kind of the norm, which has been the norm, um, which was the norm at the time.

David Hall: And what we saw when we did this is there was this, you know, a big set of aha moments because we and others who were doing this at the time were really saying, we’ve got to help bring keep some of this talent here. We’ve got to help keep some of this magic here. And so we, we, we started doing that. And then the thing that we saw when we were doing it, we went to it came to Atlanta back in 2015 when we were first there on as a part of our rise of the rest tour, we met at the Buckhead location of Atlanta Tech Village. Um, and we’re really, like, engaged with the community there. And what we’ve seen over time is that these city leaders, these corporations, these these tech folks in the city really got it back then. And they started to invest time, energy resources into building out an ecosystem that could sustain and support high growth startups. And so it’s been a real journey for us, which I’m happy to, I’m sure we’ll talk more about. But it really did start with this idea that there’s got to be a better way of connecting these early stage companies to the capital flows, and the additional resources that really young startups, specifically tech enabled, sort of venture backed startups, which is a little bit different than some of the mainstream businesses, these tech startups, connecting them to the right resources so that those businesses can scale and become big.

Lee Kantor: So, like you said, you’ve been doing this from 2015. How have you seen kind of the evolution? Because I don’t remember the exact timeline, but there was a period where every startup wanted venture funding, and then it shifted to every startup wanted to be bootstrapped. Um, where are we now in the evolution of that?

David Hall: Well, that’s that’s that’s a that’s a complicated question because of a little technology called AI. But but the general evolution of this has been there’s a small category of tech enabled startups that that require scaling capital to be able to hire the engineers and the talent and the salespeople, um, well ahead of their ability to generate enough revenue to pay for it like a traditional business would. Right. Traditional business. This. You invest some of your personal capital. You buy a restaurant or a bakery or a, you know, a small business, and you generate and you grow off of the, the, the sales and cash that that business generates. For some of the high growth businesses, the tradition has been go out and raise capital from outside investors, typically venture capital. And and you’re able to basically fund the losses of those businesses over time in hopes that you’ll be able to, you know, catch up and start to have accelerated hyper growth with the revenue and the scaling of the business. Um, where we sit today, you know, traditional venture capital companies that have built, you know, Uber and Facebook all went out and raised traditional venture capital.

David Hall: You’re right at in identifying, you know, there have been a periods of time in this industry where, you know, we’re investors in the market, wanted to see founders bootstrapped. And I think now we’re we’re solidly in a in an era where we’re seeing company formation happen so quickly because of, you know, first cloud computing and now AI that you’re seeing, you know, companies get started back again in people’s garages, you know, their proverbial garages and scale quickly through through the the ability to connect with AI resources that don’t necessarily need you don’t need 15 engineers anymore. You need a really smart couple of engineers that can do a lot more with AI resources. And so I think that we’re back to this place of having the need for early stage capital come in and invest in in these founders with great ideas, big ideas. But those founders are now able to attach that into and with faster growing businesses, because AI eliminates the need to have, you know, a, you know, a stable of of of coders, of engineers building the product.

Lee Kantor: Now, having traveled around the country and seeing startup scenes all over the place. If you were to build a startup scene from scratch, what are some of the must have elements?

David Hall: It’s a great question and I love I love the idea to sort of to pull out a whiteboard and build a startup ecosystem from scratch. I think the first thing that you need is you need a good, um. A university system usually is one of the best things that that can plant and start, um, these entrepreneurial ecosystems, the Bay area, having had Stanford and Berkeley and some of those universities, is really the prototype for how do you how do you take the injection of talent as well as, um, um, like a risk taking in, in science. Right in, in, in engineering to try to build things and then harness that and then have it sort of have it be extracted from that university and sort of commercialized in the private markets. You’ve seen that that that momentum builder happens a lot. And we see it as one of the first underpinnings of of building entrepreneurial ecosystems in places like Detroit, based with, with, with uh, the, the University of Michigan in Ann Arbor, uh, obviously Austin and UT is a big sort of university backed ecosystem. The second thing that we see that that I think is really helpful is having local leadership acknowledge the need and the desire for having a new generation of startups kind of get born or be born in the backyard of the ecosystem, in the backyard of the city. Um, the the, the the push and the help and the pull from local leaders does a really good job of mobilizing resources and helping these young companies kind of have the nursery that they need to survive and be successful. The third thing that’s helpful is having an active corporate sector. The more and the larger the corporations that are able to help us, you know, benefit these companies.

David Hall: And they do it in a couple of ways. The first and the easiest way is that they patronize these companies as customers. They become early customers of these startups that become really strong validators of their business model, of their, their, their the, the, the actual business that they’re offering. The software that they’re providing helps these big corporations do more, better, faster, cheaper, um, quicker. And that really helps validate the startup. And then the final thing that I would say is a local ecosystem, which would include everything from local media partners, which are incredibly important to help write the narratives of of these entrepreneurs and the story and the, the, the, the businesses that they’re trying to build, the industries that they’re trying to disrupt and improve, Um, are really helpful in making sure that these, um, businesses continue to scale, continue to recruit. Um, um, and so I think that there’s, you know, it’s a it’s a, it’s an ecosystem that works really well together when all of these pieces are aligned and all of these people, uh, all of these different nodes of the ecosystem have a consistent rallying cry to support startups, be welcoming to outsiders, um, create the, the, the work life opportunity that a lot of the young, mostly young people who are starting startups and working at startups really enjoy. So making sure that the community is welcoming and exciting, um, those all of those elements work well together to bring to bring, you know, a startup ecosystem to life. And if I had to do it all over again, if I had to sort of if I had my magic wand, those would be some of the elements that I’d bring to bear to create the perfect startup ecosystem.

Lee Kantor: Now, how is having a path for a wide variety of, um, startup founders? Is that a nice to have or a must have? Like, is it okay if we’re just focusing in on maybe a certain group of people that are going to a certain university or coming from a certain, um, kind of socioeconomic place in order to take the risk necessary to be a startup founder, or is it a must have to have a path for, you know, pretty much everybody to get involved in the community?

David Hall: I think the latter, I think it’s a must have to have the broadest, deepest opportunity set out of which the best successes can come, right. I think I think, you know, history teaches us when, when, when we, you know, open up our, our, our business opportunities To a diverse set of entrepreneurs who bring their own lived experiences and their own backgrounds, and their own challenges that they’ve overcome to bear. You see really good startup opportunities happen, and there are two, two places to go with this. The first is just on the startup on the origination of startups. It works really well when you pair a young, precocious founder with a, you know, a been there, done that executive who’s had who’s seen a couple of business cycles and you pair those two people together and you’re able to see they’re able to learn from each other. One can learn sort of the ways of, of, of, of traditional business. The other can help innovate and find pockets of, of disruption in the existing industry that need to to, you know, that that can be done better with technology. I think the second thing that really helps that is um, being able to, um, engage the, the, the, the, the talent and capital sector with the United front.

David Hall: Right. And I think that having a diverse pool of both founders and experiences can drive conversations with investors that are local, as well as investors that need to come into the market. Um, and I think that having multiple shots on goal, if you were for success only benefits a city and its ecosystem to have if you’re if you’re a kid that’s graduating and thinking about moving to Atlanta to work in startup with startups, in early stage startups, having 2 or 3 or four options to go to if one of those startups fails is actually a big reason to choose to relocate for a job in a specific city, in an industry, right? You want to be able to say, if startup A fails, there’s startup B, C, and D that I can go work at. And so the ability to attract and retain high performing talent really is benefited by having a deep bench of innovation, like a true innovation economy and ecosystem of alive and well and flourishing to bring that talent to the community.

Lee Kantor: Right. But it’s a chicken and egg thing. I mean, that’s what made Silicon Valley so attractive. If you went there and failed, there’d be five other places you can land without having to relocate. Where in some markets, especially when they’re starting out, you don’t have that luxury. There’s a handful of stars, and then if they don’t work, uh, then you’re in trouble. Then you might be forced to move. But I think one of the benefits of Atlanta. And then you would know this better than I would. Um, it’s just the diversity of, um, kind of clusters of business in the economy. So, like, we have a bunch of people working in little areas so that if you lose a job or the company goes away, there’s going to be a place for you in probably 15 to 20 different Industries where a lot of markets don’t have that.

David Hall: I couldn’t agree more. I mean, I think that there are so many really great and positive attributes about the Atlanta ecosystem, and one of the best is the depth and breadth of the opportunities for, you know, for professional advancement, irrespective of industry. In a in a city like Atlanta, you’ve got a deep, great bench of fortune 100, fortune 1000 companies that are there. You’ve got to really easily accessible transportation, local transportation system and international transportation system running through the city that make getting, getting places really easy. And I think that the you know, those those are those are ingredients that are really big accelerants to being able to drive innovation and access to that innovation, um, into fruition. And I look, I think you’re right. I think it is. It’s the chicken. And the egg issue is often. You know, when we were talking earlier about sort of the key ingredients to making that that ecosystem flywheel work. I think that when you look to universities like that’s a there’s a, you know, I went to Morehouse, so I’m a, I’m a Atlanta, Atlanta, uh, like success story and that there are 10,000, you know, thousands of kids a year come to Atlanta to go to one of the wonderful Atlanta universities. And it’s the job of the the business community. It’s the job of the ecosystem to keep those students. Now, residents of Atlanta there and engaged and then fully employed. And I think that you can do that through a lot of the sectors. I mean, Atlanta obviously has one of the best corporate sectors available with, you know, legendary names and brands that are that that are headquartered there. But there’s also this really burgeoning and interesting tech sector that’s, that’s, that’s thriving in Atlanta. And I think that that’s one of the, the, the big calling cards for the next generation of companies that can be born and thrive in in in the city.

Lee Kantor: Right. And I think a key component and it’s not to be discounted is the folks like a David coming that and you mentioned Tech Village earlier. He reinvested. He had an exit and reinvested. And the more founders that you have, you know, demonstrating and role modeling, reinvesting in the community, in the ecosystem, then that’s going to accelerate the growth of the ecosystem.

David Hall: Yeah, I think that the, the there are so many examples of of entrepreneurs who’ve built really good businesses, and those businesses have gone on to sometimes become great businesses and, and generate lots of personal and community wealth for, you know, the early employees who took big risks at the time to work with, you know, folks like a Steve Case in Washington, DC, in the DC area with with AOL or people like Dan Gilbert in the Detroit area. Uh, Kevin Plank in Baltimore. The stories go on and on of these folks who were very successful. But then came, you know, reinvested. And the other folks that they brought with them reinvested in the community to make, you know, to help create this, this glide. Um, glide path for other entrepreneurs to follow suit. And you’re starting to see the benefits of that again, really start to take hold. I think Dave, Dave Cummins is a great example. And if you think of the companies that were founded out of Atlanta Tech Village or had some association with Atlanta Tech Village, and just think about, you know, the I call them like the grandchildren of of of Dave’s original vision. You know, there have been dozens of companies that were founded there that all are you know, many of them are staying local and continuing to grow and scale and become part of that foundation layer of of, uh, you know, a thriving tech ecosystem.

Lee Kantor: So when revolution comes to a market and invests in the startups and the market is that the intention is to keep the business in the market in order to grow and thrive and become a, you know, an important part of the ecosystem.

David Hall: That’s that’s our intention and that’s our goal. So we don’t, you know, we don’t enforce it. If a if a company has a better opportunity to go someplace else, that’s we’re investors and we have to kind of abide by that. But our intention and our hope and our expectation is that it’s a perfect match of the, the, the founder and the team falling in love with the city and the city falling in love with, with, with the company and and there being a mutual embrace. We have this this phrase that we use around our place called founder. There’s a common phrase in venture capital that’s called founder Market Fit. How does the founder work within the industry that they’ve chosen the markets that they’re serving and have a really good fit? We had a third word to that. That construct called founder Market Geography Fit. And how does it help? How does it help benefit a founder to be in the geography, um, and the market that they’re serving? How does that overlap really be self reinforcing and make it a more important and stickier fit? Um, um, in, in, in building their business, a great example from our portfolio is one of our companies, Hermes, which is building hypersonic, um, aircraft. And it’s based in Atlanta. And, you know, you guys know a lot about putting airplanes in the sky in the city of Atlanta.

David Hall: And it’s been a great story to pull, you know, technology from Georgia Tech know how out of some of the airline and aircraft servicing companies that are based in Atlanta to then learn how to and actually manufacture a plane that’s going to be able to fly at Mach five speeds at some point. And like that’s a that’s a great example of why the founder and market was was perfect fit. But then the geography also really helped inform and give unique advantages to what that company is going to be able to achieve, because they’re they’re coming to a city that that is a global transportation hub, that know how that ingenuity, that experience, that you know, the the access to, to, to, to the, the, the, the, the people that have been building planes for 100 years, building airplanes, flying planes for 100 years is based in Atlanta. And now that those resources are accessible to this really small startup, relative to some of the big transportation names that are that are headquartered in Atlanta, this tiny company now can pick up the phone and call some of those people and get the insight. If not, hire them or even have them invest in in building out the next future of of hypersonic flight.

Lee Kantor: So you’ve been working in and around the community for ten years here. Um, what have you taken from it? How are we doing when you kind of benchmark us against some of the other markets that you’re in?

David Hall: Yeah. I’ll give you a couple of anecdotes that I think are really exciting. When we first came to Atlanta in 2015, and we’re building out sort of the people that we we thought we needed to see and meet at the, you know, we call the meeting, we said, hey, we’d love to have everybody come together and we came together. And to be frankly, at the at the time, it was a room of all white guys and we were like, surely in Atlanta we can we can find a couple of women and a couple of people of color to help, you know, talk about what the future is of of technology and innovation in, in Atlanta. One of the things that I’m really excited about for the city is when we came back and were there a couple of weeks ago, and we did the same call for attendance, the room was probably half female. There was some. There were lots of people of color in the room, lots of African American people in the room, and that was all organic. We didn’t have to ask to, you know, to have more, have a broader table. The the ecosystem has evolved such that those people have now come into leadership positions around the Atlanta tech ecosystem. And I think that that’s one of the, you know, we talked about making sure that we have the broadest array of of minds and thinking and lived experience around the table. It it was really great to see that happen organically and not have to be orchestrated, frankly, like it had to be orchestrated back in 2015.

Lee Kantor: So what are some of the success stories you can share that are coming out of here?

David Hall: Yeah, I think one of the first is when we were when we were in Atlanta for our rise of the rest pitch competition in 2015. There was a young woman, her name Jewell. Jewell Burke at the time, Jewell Burks at the time, won the pitch competition with a company called Park Pitch that was basically using an app to, you know, you take a picture of a part on your phone and using visual search, was able to identify that part. She won that competition and went on to build the business that ultimately was sold to Amazon. And again, to just do the fast forward with somebody like Jewell. Jewell is now, ten years later, a venture capitalist herself, has gone through the wringer as an entrepreneur, has worked for Google and, you know, many big companies, Amazon and is now on the other side, allocating capital back into the startup, you know, the startup ecosystem that helped launch her career. I think that that’s one of the best personal narratives of personal narratives of success, and how that Atlanta ecosystem was able to support, support her and her her co-founder as they built part pick and now kind of has come full circle, really indicating like the ability to pay it forward and make it successful. Another one of our portfolio companies is a warehouse management company called stored that was started by a guy called Sean Henry, really young entrepreneur. And, you know, he was the business has been able to act actively and intuitively navigate some of the worst supply chain and logistics challenges that our country has faced over the last couple of years by using technology and embedding, you know, the next generation of technology in warehouses that are often when you think about a warehouse, you see people walking around with clipboards and they’re able to put this, you know, they’re able to digitize, um, supply chain inventories so that when a big, big brand is looking for, you know, 300 TVs, instead of having to, you know, pilfer through a bunch of clipboards, they’re able to just key it in and they know where those TVs are and can get them from the warehouse to the store shelves where they’re where they’re, you know, going to be able to be likely sold.

David Hall: And so we’re really excited about the business of stored. The third company that I’ve mentioned is a company called vision, uh, started by a guy called Kyle Henderson. These guys, the shorthand for vision is it’s, um. Tracking numbers for shipping containers. So these big containers that sort of get loaded up in, in Asia and float across the Pacific Ocean, land in the port of LA, and then have to get either trucked or trained across the country to get to store shelves. Knowing where those those containers are, you know, are they is it in the Panama Canal? Is it held up someplace, is a really big business and really important for being able to get product from from manufacturer, from being finished to store shelves and being able to have that intelligence that can track that product where it is in the world is a really hard and complicated task that these guys have figured out. These are some of the bright stars that we see in the Atlanta ecosystem and keep us really excited about the future.

Lee Kantor: So what do you need more of? How can we help?

David Hall: Well, we need more support. I mean, if, you know, if, if, if you are a corporation in Atlanta, if you run a corporation in Atlanta. You know, I think one of the biggest ways and I mentioned this earlier, you know, how are you thinking about innovation in your business? Where are you investing your capital into the next generation of startups? If you are an investor and you want to you want to put some money to work instead of, you know, you know, lean into making that, taking that risk and investing in a startup, it can, you know, it can be a really great experience for for investors to to partner with early stage entrepreneurs and give them the benefit of your experience. If you’re an employee and you’re kind of, you know, you know, that you can do something better than the way that your company has done it. Now is a great time to peel off and build that, that, that solution that you know your company needs. And instead of sort of being an employee, you could be the boss and you can run that company and build that innovation. And all of that can likely be done within the confines of the city of Atlanta. So I guess the quick answer is like, get involved.

David Hall: There are lots of ways to get involved in the in the in the technology space, in the in the startup world. And there’s lots of need for experienced um, been there, done that. Executives. Um, there’s lots of need for for mentorship to help, you know, ease the the exit from a corporate employee to being a startup founder. There’s always additional need for capital. If you if you want to invest, if you have capital to invest, there are lots of funds in the Atlanta area that are looking for additional investors to invest in those funds so that the funds can then invest in companies. There’s lots of ways to get involved. And I think the biggest answer that we need for for cities like Atlanta or other cities, and that we think are part of the next generation of rising markets, is to get involved, get off of the sidelines and be part of the next generation of great company building that that will be the next, you know, the next great the next great. Names on buildings across the Atlanta skyline are right now being built in somebody’s garage or in somebody’s accelerator or somebody’s dorm room. Make sure that those businesses stay in Atlanta.

Lee Kantor: And if somebody wants to connect with you or Revolution, what’s the website? What’s the best way to connect?

David Hall: Best way to connect with us is our website. You can find me on X at three, the number three and look forward to connecting with with you guys on on social or um, through through our website.

Lee Kantor: Well, David, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

David Hall: Thanks a lot, Lee. Really excited.

Lee Kantor: All right. This is Lee Kantor. We’ll see you all next time on Atlanta Business Radio.