Beyond Silicon Valley | Rise of the Rest

BEYOND SILICON VALLEY COASTAL DOLLARS AND LOCAL INVESTORS ACCELERATE EARLY-STAGE STARTUP FUNDING ACROSS THE US AERIAL VIEW OF ST. LOUIS, MO DATA PROVIDED BY

CONTENTS EXECUTIVE SUMMARY 2 ARE BAY AREA FIRMS LOOKING ELSEWHERE? 3 WHERE ARE THEY GOING? 4 ARE THERE NEW INVESTORS IN OUTSIDE ECOSYSTEMS? 5 WHERE DO THINGS GO FROM HERE? 6 CITY SPOTLIGHTS 7-12 EXECUTIVE SUMMARY t Revolution, we have long encouraged others within the KEY TAKEAWAYS venture industry to challenge their preconceived notions Aabout where innovation is possible. We knew investors And what we found was validating. Our analysis reveals that investor could find compelling investment opportunities in cities across interest is increasingly tipping towards “rising cities.” The data shows the country, especially as more entrepreneurs sought to start that the proportion of early-stage VC dollars going to Bay Area companies in cities where sector expertise already existed. We startups has been on a steady decline. In 2021, that ratio is on pace called it Rise of the Rest. What began as a clarion call more than a to be below 30% for the first time in more than 10 years. And that’s decade ago, morphed into a nationwide bus tour of rising cities in despite the fact that 2021 is turning into a record year for the VC 2014, and then became its own seed-stage venture fund within the industry. We also found a significant increase in the number of active Revolution family in 2017. VC firms outside of the Bay Area, forming a new local investment network for startups in emerging startup ecosystems. After traveling more than 11,000 miles across the country to visit more than 40 cities by bus, and subsequently investing in more However, while the data tells a valuable story, it’s not the whole than 170 early-stage startups—with more than 300 institutional picture. The charts and tables in this report represent the hard work co-investors—the sense that momentum was building for our of people in cities across the US—people we’ve had the privilege of once-contrarian investment thesis felt palpable. But the headline backing or investing alongside. data seemingly refused to budge. Year after year, venture industry reporting delivered the same statistic: Approximately 75% of venture Some may have called us crazy for hopping on a bus to explore far- capital (VC)investment dollars continued to go to just three states: flung startup communities, but that has proven to be time well spent. California, New York, and Massachusetts. Silicon Valley has been successful, in large part, because of the robust network density that exists there. Rising cities require the same strong, As is the case with so many things in tech today, however, the collaborative networks to support scaling startups, but building them pandemic seemingly accelerated interest in venture investing takes time and effort. Meeting founders on Zoom has made investing throughout the country, rather than in just a select concentration outside the Valley easier for VCs, but that’s no substitute for getting of locales. on a plane (or bus) to connect with entrepreneurs face-to-face and the diverse communities of investors, corporations, and universities that With that as a backdrop, we partnered with PitchBook Data to look support them. beyond the headlines and see where venture dollars—early stage in particular—were really going. Revolution Chairman & CEO Steve Case and the Rise of the Rest Team 2 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

ARE BAY AREA FIRMS LOOKING ELSEWHERE? FIG. 1 Bay Area share of seed- and early-stage US VC dollars Bay Area startups, headquartered in the epicenter of the VC industry, 40% are accounting for a smaller percentage of US VC investments. So far this year, fewer than 30% of US VC dollars have gone to Bay Area startups, continuing a downward trend over the past 10 years. In 2014, the share was more than 40%. 35% 30.7% Much of that is driven by Bay Area VC firms bringing their own capital to smaller ecosystems, especially at the early stage. As recently as 30% 2017, more than 50% of early-stage Bay Area dollars went to Bay 27.2% Area startups. Today, that percentage is 37%. That begs the question: Where is all that Bay Area capital going? 25% 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Source: PitchBook | Geography: Bay Area | *As of September 1, 2021 Note: Bay Area is defined as San Francisico and San Jose MSA The chart to the right helps to quantify that migration. More than $13 FIG. 2 Bay Area seed- and early-stage VC dollars invested billion of Bay Area capital has been invested this year outside of the outside of the Bay Area, New York, and Boston Bay Area, New York, and Boston. This increase looks similar to other VC charts at the moment, with big spikes in 2021 totals. 1,055 1,050 903 955 In each of the past two years, at least $11 billion of Bay Area capital 801 have been invested outside of the three major ecosystems. A decade 383 623 671 679 ago, in 2011, that figure was well under $3 billion. Deal volume is 5 582 . 442 coming close to tripling, as well. Today, more than 1,000 rounds are $2 done each year in outside ecosystems, compared to 383 rounds a .1 .7 2 2 4 decade ago. $ 8 .6 8 .7 . $ .4 . . 1 3 3.8 3.8 4 8 1 $ $ $ $5 $ $8 $ $1 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Deal value ($B) Deal count Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes startups in the Bay Area, New York, and Boston FIG. 3 New York seed- and early-stage VC dollars invested The story also holds true on the east coast. New York VC firms have outside of the Bay Area, New York, and Boston invested more than $10 billion in early-stage capital outside of major ecosystems this year. That is 26.7% higher than the $8.5 billion 719 756 745 invested last year. 593 In 2011, the same figure was barely above $1 billion, meaning the 516 number of New York dollars invested in outside ecosystems has grown 221 436 441 434 5 329 more than sevenfold over the past decade. The outward trend is set to . 281 accelerate in a post-COVID world, as remote work will allow startups $1 4 5 to emerge and sustain themselves in any pocket of the country. . . 8 9 3 3 9 .7 $1 $1 . . .0 . .5 0 4 4. 7. 8 1 $2 $2 $ $ $6 $ $ $ 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Deal value ($B) Deal count Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes startups in the Bay Area, New York and Boston 3 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

WHERE ARE THEY GOING? The tables below show cities across the country where Bay Area- and New York City-based VCs have deployed significant capital over the past decade. While the lists are similar, geography does play a role: Figure 4 skews slightly west, and Figure 5 slightly east. FIG. 4 Top CSAs by seed- and early-stage VC dollars in FIG. 5 Top CSAs by seed- and early-stage VC dollars in rounds with Bay Area investor participation (2011–2021*) rounds with New York investor participation (2011–2021*) CSA DOLLARS INVESTED CSA DOLLARS INVESTED Los Angeles $24.2B Los Angeles $18.0B Seattle $5.8B Philadelphia $3.1B Austin $4.2B Washington, D.C. $3.0B Washington, D.C. $3.2B Seattle $3.0B Denver $3.1B Austin $2.4B Chicago $3.0B Chicago $2.2B Philadelphia $2.9B Atlanta $2.2B Dallas $2.9B Denver $2.0B Atlanta $2.3B Miami $2.0B Miami $1.9B Dallas $1.3B Salt Lake City $1.6B Salt Lake City $984M Minneapolis $1.3B Columbus $834M Raleigh $1.0B Raleigh $827M Portland $852M Minneapolis $704M Phoenix $637M Houston $626M Detroit $597M Detroit $554M Houston $572M Phoenix $504M Orlando $435M Portland $471M Columbus $432M Orlando $382M Sacramento $427M Pittsburgh $364M Nashville $391M St. Louis $351M Pittsburgh $325M Nashville $348M Las Vegas $321M Cincinnati $266M Cincinnati $300M Indianapolis $245M Reno $269M Las Vegas $198M St. Louis $245M Kansas City $165M Indianapolis $243M Charlotte $139M Kansas City $205M Buffalo $138M Tucson $180M Hartford $132M Sarasota $174M Cleveland $121M Source: PitchBook | Geography: US | *As of September 1, 2021 Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes startups in the Bay Area, New York, and Boston Note: Excludes startups in the Bay Area, New York, and Boston 4 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

ARE THERE NEW INVESTORS IN OUTSIDE ECOSYSTEMS? FIG. 6 Number of active investors in seed- and early-stage The migration of Bay Area dollars is only part of the story. Just as Bay VC outside of the Bay Area, New York, and Boston Area firms look elsewhere, more investors of all stripes have become active in the early-stage market in smaller ecosystems. The chart to 4,000 3,706 the left shows an increase in active investors in seed- and early-stage 3,500 3,168 rounds outside of the Bay Area, New York, and Boston. In each of 3,000 the past four years, there have been around 3,000 active investors, 2,500 compared to just over 1,000 active investors a decade ago. Aside from early-stage VC firms, the growing crowd of investors includes 2,000 corporate venture capital, accelerators, incubators, and private equity 1,500 shops, among other investor types. 1,000 500 0 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes active investors based in the Bay Area, New York, and Boston On top of established VC firms and non-traditional investors coming FIG. 7 US VC firms founded outside of the Bay Area, New into smaller ecosystems, new VC firms are launching outside of the York, and Boston major ecosystems, too. Between 2011 and 2021, 1,445 new venture firms were founded in smaller ecosystems around the country. New VC firms in smaller ecosystems are likely to invest more of their dollars on local—or at least regional—startups. And while its no longer true that startups need to be within walking distance of their investors, it doesn’t hurt that smaller ecosystems have local investors who intimately know their areas. +1,445 NEW VC FIRMS SINCE 2011 Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes new VC firms based in the Bay Area, New York, and Boston FIG. 8 US VC fundraising activity outside of the Bay Area, With more active investors comes more fundraising dollars—a trend New York, and Boston that continues to increase. In YTD 2021, VC firms outside the Bay Area, New York, and Boston have raised more than $21 billion. 267 265 276 264 254 A decade ago, that total was barely above $3 billion. While the 226 number of funds raised has gone down in recent years, the excess 211 213 capital raised suggests many of those funds are the second or third 80 vehicles—which tend to be bigger—raised by individual firms. That 136 143 reflects growing confidence in those investors and, in a larger sense, .0 2 the ecosystems themselves. 3 . $ .5 $5 3 2 8 .4 . 8 6 . $ .4 0 . . .0 6 1 6 6.5 1 1 2 $ $ $1 $8 $1 $1 $1 $ 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Capital raised Fund count Source: PitchBook | Geography: US | *As of September 1, 2021 Note: Excludes VC firms based in the Bay Area, New York, and Boston 5 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

WHERE DO THINGS GO FROM HERE? FIG. 9 Series B deal activity led by Bay Area investors in startups outside of the Bay Area 112 101 100 93 88 84 78 59 63 51 49 $0.8 $0.8 $1.2 $1.8 $1.8 $1.3 $2.5 $3.1 $3.3 $4.2 $5.7 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Deal value ($B) Deal count Source: PitchBook | Geography: US, excluding Bay Area startups | *As of September 1, 2021 Note: Bay Area is defined as San Francisco and San Jose MSA. No other ecosystems were excluded from the figures above. s we can see, capital is increasingly flowing to companies In the pages that follow, we dive into the data and stories of twelve based outside of the Bay Area. More and more VC firms are growing startup communities—just a fraction of the great innovation Asetting up shop in places across the country. And perhaps most ecosystems in which Revolution has spent considerable time over interestingly, regional investors dedicated to finding local companies the last decade. We excluded from this conversation cities such as with breakout potential are popping up in cities across the country. Seattle, Austin, Chicago, and LA, which have experienced strong Taken together, these forces are driving more interest and investment momentum—and received more attention—in recent years. Instead, in companies headquartered in places like Washington, D.C., Phoenix, we asked some of our friends in other innovation communities to and Nashville. All of this is happening as the overall market is tell us why their cities are increasingly showing up on the map. The expanding: 2021 is on pace to be another record-breaking year for reasons vary, but some common denominators emerge: Tech talent VC investment. has spread everywhere following COVID-19; livability is crucial; culture matters; local corporations are helping; sector expertise is increasingly The chart above tells the story of how far we’ve come, and where we important; and universities are initiating a new era of entrepreneurship might be headed. Compared to a decade ago, when Revolution first education. started building it’s Rise of the Rest infrastructure, Bay Area VCs are now deploying nearly six times the dollars outside their region. The The pieces of this puzzle are complex. Getting innovation off the lion’s share of VC AUM sits in the Bay area, but it’s clearly no longer ground isn’t about following a Silicon Valley recipe. That’s why true that a founder must be in walking distance to get a check. Revolution has spent years building our nationwide network, meeting founders where they are. We don’t see this as just investing in The more that capital gets off the sidelines, the better for companies. We are investing in entrepreneurial communities. entrepreneurs everywhere—and the better for America’s future economic competitiveness: more investment, more startups, more Talent is equally distributed, but opportunity is not. We hope that the jobs. Startups are responsible for nearly all net new job creation in acceleration of capital away from the Bay Area isn’t just a pandemic the US, making greater startup investment outside of the Bay Area blip on the radar, but a turning point for entrepreneurs everywhere, a driving force in creating a more equitable distribution of economic and a final blow to the idea that the Bay Area has a monopoly on growth and opportunity. US innovation. 6 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

DALLAS DENVER FIG. 10 Dallas seed- and early-stage VC deal activity Denver's startup ecosystem has grown and developed 87 tremendously even in the past five years. We see it across 74 the board: Founders choosing to build their businesses here 40 68 64 in the city, VCs putting down roots in the region, incredible .7 63 61 59 talent relocating here from across the country, and professional 5 48 52 51 services firms growing their teams locally. On top of the many 9 3 success stories that fuel excitement and growth in our city, we $ .0 3 5 9 . 5 0. 0 have a wonderfully supportive startup and founder community, 0 51 7. 5 . 4 2 5 . 4 which is both impressive and accessible. 3 4 2 1 . .0 $ $ . 3 3 . 25 9 0 8 $ $ 22 2 4 5 2 24 $ 1 $ 0 6 $1 $ , , $1 $1 CRISTINA DEVITO 1 3 4 7 8 * CFO & CSO at Havenly 1 2 1 1 5 6 1 9 1 1 1 1 1 1 20 20 20 20 20 20 20 20 20 20 20 02 2 FIG. 11 Denver seed- and early-stage VC deal activity Deal value ($M) Deal count 184 Source: PitchBook | Geography: Dallas 153 158 160 *As of September 1, 2021 120 122 128 112 126 eed- and early-stage activity has surged in Dallas in recent 95 96 years. Last year was a record for deal volume, with 87 seed- 3 Sand early-stage rounds worth a combined $1.0 billion. 2021 has 7. 8 already surpassed that dollar value, with $1.7 billion invested through 2 9 9 $ 0 3 3 3 . 5 8 4 9 . . early September. A decade ago, in 2011, only 33 seed and early- 4. 5. . . . 2. 6 6. 02 4 1 0 3 3 8 5 70 13 stage rounds were raised worth a combined $395.7 million. The chart 4 3 3 41 51 61 6 , 1 above shows an unmistakable increase in startup activity, and two $ $ $ $ $ $ $6 $9 $ $ consecutive years above the $1 billion mark bodes well going forward. 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 Dallas startups have tended to be overlooked. That is changing, Deal value ($M) Deal count with a visible upswing in local VC investments and a record Source: PitchBook | Geography: Denver 2020. Still, there’s plenty of room for improvement. That’s *As of September 1, 2021 why Dallas mayor Eric Johnson spearheaded the Task Force on Innovation and Entrepreneurship, which is designed to enver’s ecosystem has grown over the past decade, both create a plan in North Texas to attract, retain, and support local statistically and influentially. In 2011, seed- and early-stage VC entrepreneurs. Dallas is one of only a few cities to implement a Dfinancing recorded 95 rounds for a combined $402.9 million. By program like this. 2019, Denver’s seed and early-stage deal volume almost doubled to Often associated with energy, Dallas is home to several 184 rounds. Over time, the amount of capital coming into Denver also big names in other industries. AT&T is headquartered here, rose steadily, breaching $1 billion for the first time this year. buttressing a strong talent pool for the technology sector. Texas Instruments and Match Group are also here, which has helped local startups attract tech talent to the city. Match Group, for example, is supporting the task force by building its matching technology that pairs startups and mentors from similar industries. MANDY PRICE CEO and co-founder of Kanarys (a ROTR Portfolio Company), Co-Chair of Mayor’s Task Force on Innovation and Entrepreneurship 7 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

KANSAS CITY MINNEAPOLIS FIG. 13 Minneapolis seed- and early-stage VC deal activity Kansas City has had a lot of success recently in the govtech space. Replica, PayIt, Daupler, OpenCities and the recent 66 acquisition of NIC are all examples of that. All have enjoyed 52 great traction nationally, raised early money locally and brought 48 48 51 in large follow-on funding from top tier VCs as they gained 43 42 46 momentum. We’re also seeing an uptick in industrial tech 36 35 38 companies scaling and raising early money locally, including 8 Kansas City-based angels. Super Dispatch, Labor Charts and 3 2 7. . . 6 Kenzen are just a few examples. 9 1 2 3 129 $ 9 3 6 . $1 . . 8 0 . .1 .6 $ 2 3 . . 1 1 2 1 4 6 0 C2FO has raised more than $300 million from top venture firms 24 28 20 43 61 188 2 3 and is now a global company that started in Kansas City. The $ $ $ $ $ $ $ $ same is true for NIC, which was recently acquired for $2.3 billion. 1 2 3 4 5 6 7 8 9 * Both companies have recruited talent from the coasts. Brad Feld 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 once wrote that venture was following companies wherever they 2 were located. COVID really blew the lid off of that. VC firms are Deal value ($M) Deal count starting to realize they need to look for companies anywhere and everywhere, and companies are starting to realize the same Source: PitchBook | Geography: Minneapolis for new talent. This will change everything, and ecosystems like *As of September 1, 2021 Kansas City can benefit as a result. eed- and early-stage Minneapolis startups have raised at least LESA MITCHELL $200 million of VC in six of the past seven years. The lone General Manager, Techstars Sexception, 2019, saw $188.6 million raised, making the $200 million level a fair baseline for the ecosystem. FIG. 12 Kansas City seed- and early-stage VC deal activity 29 Our market has grown considerably over the last few years, and we have a lot of factors to thank for that. The Twin Cities are home to the highest ratio of Fortune 500 companies per capita 21 19 20 19 21 20 of any city in the country. On the healthcare side, we’re home 18 17 to UnitedHealth Group, the Mayo Clinic, and Medtronic, among 15 others. Other names include Best Buy, Target, 3M, Cargill, and US Bank. That strong corporate foundation has allowed healthcare 9 10 and enterprise software startups to flourish here. 8 8 2 .7 .7 3 6 .6 20. 0 6. 4. . .6 7. 4 $ The University of Minnesota is also one of the strongest colleges 1 6 5 7. 8. 13 4 42 3 3 3 8 4 6 in the country in life science and biotech innovation, thanks to $ $ $ $ $ $ $ $ $ $7 programs such as the University Enterprise Labs. 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 Minnesota is a beautiful state, and people who move here 2 appreciate the surroundings. Many families choose to split their Deal value ($M) Deal count time between the Twin Cities and a second lake home within a Source: PitchBook | Geography: Kansas City two- or three-hour drive of the city. With remote work more widely *As of September 1, 2021 accepted post-COVID, many employees are spending upwards of three–four days a week working from their cabins. That’s a natural draw for entrepreneurs and the ecosystem as a whole he Kansas City ecosystem is in its early stages of development going forward. but has the ingredients to emerge in the coming years. Seed and Tearly-stage VC deal volume is consistent every year, hovering around 20 rounds on an annual basis. Between 2012 and 2016, ROB WEBER combined seed- and early-stage value was consistently below $50 Co-founder and Managing Partner, Great North million, notwithstanding an outlier record year in 2011 of $136.8 million. Ventures More recently, between 2017 and 2021, three years have seen at least $65 million in combined funding. Through early September, 2021 is on pace to be Kansas City’s second-highest on record. 8 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

NASHVILLE PHILADELPHIA FIG. 14 Nashville seed- and early-stage VC deal activity Philadelphia startups have a wealth of resources, including 59 world-class universities and a long list of potential Fortune 500 clients for enterprise startups. Two local schools—University of 47 44 45 Pennsylvania and Drexel University—play prominent roles in the 41 37 39 ecosystem. Both of Philadelphia’s latest unicorns, Gopuff and 34 33 Misfits Market were founded by former students at the schools. 29 You’ll also find alumni of those schools serving as angel investors 5 5 24 to local startups before they get recognized at a national level. . 2. 8 7 $6 8 2 9 2 $ 9 2 2 . 2 2 . . . . . . . 1 And then there’s the established companies here—Comcast, 6 0. 1 43 3 9 3 9 5 8 0 0 3 6 6 33 Aramark, AmerisourceBergen and Lincoln National, among $1 $ $1 $2 $1 $1 $1 $1 $ others. Comcast is a familiar name in Philadelphia, and they’ve 1 2 3 4 5 6 7 8 9 * taken steps to increase their engagement with startups and 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 founders, including event sponsorships and accelerator 2 partnerships with Techstars, Dreamit Ventures and others. Deal value ($M) Deal count We have a reputation for being the city where startups get off Source: PitchBook | Geography: Nashville the ground before moving to Silicon Valley or New York to grow *As of September 1, 2021 and exit. That narrative is changing. If the current “work from anywhere” movement becomes the new normal, Philadelphia ashville’s seed- and early-stage market has brought in has a unique opportunity to bring in new talent and be the city consistently high dollar amounts—only three years have been where dreams are started, evolve, and get realized. N below $100 million. Deal volume has fluctuated, peaking at 59 seed and early-stage rounds in 2014. Over $330 million has been WILLIAM CROWDER invested through early September. A decade ago, that combined value Founder and Managing Partner, Aperture Venture was only $68.5 million. Capital Healthcare has been the biggest sector in the city for many FIG. 15 Philadelphia seed- and early-stage VC deal activity decades, and several healthcare-focused family offices, angel 188 180 networks, and institutional funds have been formed to help the 172 sector grow. HCA Healthcare is headquartered here, where the 153 bulk of their 235,000 employees live. Automotive is another 127 124 135 legacy sector, with Nissan North America and Bridgestone 116 108 Americas headquartered in the city. 85 92 .7 0 5 4 . .0 Nashville’s biggest startup success—SmileDirectClub—was . 9 1 0. 5 1 76 9 8 9 3 3 2 2 . . 8 initially crowdfunded through IndieGogo. It went public in 2019 at 24 $ .1 9 8 9 .6 . 2 $ 6 $ . $ 0 4 6 an $8.9 billion valuation, marking the first major direct-to- $ 0 6 0 3 3 100 5 75 , , 8 , consumer success story for the ecosystem, expanding 1 $ $ $1 $1 $ $ Nashville’s prospects beyond traditional healthcare. Other 1 2 3 4 5 6 7 8 9 * sectors are emerging as well. A number of fintech startups are 1 1 1 1 1 1 1 1 1 20 1 making waves, including Built Technologies, Blueprint Title, and 20 20 20 20 20 20 20 20 20 20 02 2 Alto. Deal value ($M) Deal count We think Nashville is poised to become a breakout venture Source: PitchBook | Geography: Philadelphia hub in as quickly as 3–5 years. More and more entrepreneurs *As of September 1, 2021 are relocating here from the Bay Area, New York, and Los Angeles, and several venture firms have opened offices in hiladelphia’s ecosystem has grown by leaps and bounds over Nashville. Even corporations are moving here, the biggest being the past ten years. 85 seed- and early-stage investments were AllianceBernstein, which manages almost $600 billion of assets. Pmade in 2011, worth a combined $230.5 million. Three of the past It moved its headquarters from Wall Street, where it had been four years, by contrast, have all exceeded $1 billion of seed- and early- since its founding. stage VC investment, topping out at $1.3 billion in 2019. Philadelphia also routinely sees at least 150 seed- and early-stage financings each MONIQUE VILLA year, which bodes well for a growing ecosystem. Investor, Mucker Capital, Co-founder, Build in SE 9 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

PHOENIX RALEIGH- DURHAM Phoenix is the fifth largest city in the United States, but our ecosystem feels much more intimate because of its active network of super connectors. The local ecosystem has grown FIG. 17 Raleigh-Durham seed- and early-stage VC deal activity exponentially, in no small part due to StartupAZ, the Greater Phoenix Economic Council, the #yesPHX movement, and 62 62 64 pioneering founders who helped attract early capital. We have 56 plenty of local success stories, including GoDaddy, Keap, WebPT, 48 51 49 49 and Qwick. 44 42 Innovation in culture begets innovative culture, and our 33 6 8 2 . 7 universities are a critical reason for our success. Arizona State . . . .1 0 8 74 University produces new entrepreneurs every year, not to 4 6.5 6 6 183 1 3 $1 $ $ 1 0 $1 .1 2 .7 9 $ 1 5 . mention the faculty and researchers in the background who lend $ . 8 9 9 7. their expertise and lab research to their students. We think we 5 9 0 9 211 2 3 5 have key strengths in tech-enhanced and tech-enabled solutions, $ $ $1 $ $ from smarter transportation to cutting-edge healthcare, thanks to 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 world class universities like ASU. 20 20 20 20 20 20 20 20 20 20 02 2 JI MI CHOI Deal value ($M) Deal count Vice President, ASU Knowledge Enterprise Source: PitchBook | Geography: Raleigh-Durham *As of September 1, 2021 FIG. 16 Phoenix seed- and early-stage VC deal activity 51 aleigh’s VC market is visibly bigger today than it was a decade 47 ago. Through early September, Raleigh has seen 64 seed- and 42 Rearly-stage financings worth a combined $597.9 million. In 2011, 38 40 by contrast, only 33 seed and early-stage rounds were done for a 35 29 36 combined $134.1 million. While the Raleigh-Durham area doesn’t have 32 28 hundreds of these deals taking place every year, it’s on an upward 21 trajectory, with 2021 already breaking volume and value records. 2 4 . . 2 1 7 8 5 7 0. .7 $8 .0 . .0 . . . $66 5 3 2 .0 5 8 2 2 The Raleigh-Durham area is known as “The Triangle” because $ 2 7 0 4 25 1 1 42 3 28 2 24 it crisscrosses three major universities. Duke University, the $ $1 $1 $ $ $ $ $ 1 2 3 4 5 6 7 8 9 * University of North Carolina and North Carolina State University 1 1 1 1 1 1 1 1 1 20 1 are founder factories, producing ideas and talent that undergird 20 20 20 20 20 20 20 20 20 20 02 the area’s ecosystem. That includes new graduates and alumni, 2 Deal value ($M) Deal count the latter of which have formed active angel networks to support local startups. Source: PitchBook | Geography: Phoenix *As of September 1, 2021 Entrepreneurs elsewhere have noticed. A common theme to their relocating here is that their runways are three times as long, hoenix is strengthening as an ecosystem. Ten years ago, 21 thanks to lower costs of living and an accessible housing market. seed- and early-stage financings were made, worth a combined The area has several legacy corporations, including IBM, Cisco, P$66.4 million. VC volume has increased steadily since then, GlaxoSmithKline, and Fidelity, but new entrants such as Google and the ecosystem regularly sees at least 40 early-stage financings Cloud are validating the Triangle’s status as a tech hub. We think per year. In terms of dollars invested, however, the ecosystem is this bodes well for the next decade, and we expect explosive much bigger today than it was a decade ago. In 2017, total capital growth as a result. invested skyrocketed to $425.7 million, much higher than the city had ever seen. Every year since, seed and early-stage financings have TIM SCALES remained above the $200 million mark. Director of Growth, American Underground 10 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

SALT LAKE ST. LOUIS CITY St. Louis might be known as a primarily food and agriculture driven economy, especially when it comes to the startup and alt Lake City and nearby Provo have become influential startup tech ecosystem here. However, St. Louis also has a history of hubs over the past decade. In 2011, seed- and early-stage launching iconic brands such as Budweiser, Purina, Panera, and Sfinancing was $217.8 million across 40 rounds. Today, those Energizer. We hope Summersalt will join their ranks soon, with capital levels are substantially higher. 2021 will likely eclipse the $1 a generation-defining lifestyle brand that stands for inspiring billion mark for the first time, with $894.9 million invested through joy in our consumers by making women feel comfortable early September. Thanks to heavyweights such as Qualtrics, Salt Lake and confident, initially in swimwear and now throughout their City’s bona fides as an emerging startup hub is attracting scores of entire wardrobe. talent from across the country. In turn, employees from existing tech companies are more likely to strike out on their own. The past seven We've been fortunate to have the support of local investors years have each seen at least 60 seed and early-stage rounds in such as Lewis & Clark Ventures and Cultivation Capital, regional the ecosystem. Capital levels are now reliably above $250 million investors from other Midwest cities, and now firms from places every year. such as Silicon Valley, New York, Boston, and Utah. More and more startups across industries are springing up in St. Louis, FIG. 18 Salt Lake City seed- and early-stage VC deal activity making this a diverse, vibrant ecosystem for entrepreneurs. We are excited for what's to come, and to help the next generation of 80 84 St. Louis founders thrive. 77 40 69 65 70 LORI COULTER 63 57 .8 Co-Founder, CEO, and President of Summersalt (a 7 ROTR Portfolio Company) 21 39 40 $ RESHMA CHAMBERLIN 3 Co-Founder and Chief Brand & Digital Officer of 6 85. .4 7. 1 2 2 3 9 Summersalt (a ROTR Portfolio Company) 6 1 $ .7 . . .7 9 1 7. 3 6 2 3.8 4. $ $ 5 2 93 42 5 3 9 2 3 3 2 3 8 $ $ $ $ $ $ $ he St. Louis ecosystem has enjoyed consistent seed and early- 1 2 3 4 5 6 7 8 9 * stage deal volume over the past decade. What has changed is 1 1 1 1 1 1 1 1 1 20 1 Tthe dollar amounts, which are much higher today compared to 20 20 20 20 20 20 20 20 20 20 02 2011. 2021 is an outlier year at $247.1 million. Between 2018 and 2020, 2 Deal value ($M) Deal count St. Louis was becoming adjusted to around $100 million of seed and early-stage dollars per year. In 2011, by comparison, that number was Source: PitchBook | Geography: Salt Lake City only $35.3 million. *As of September 1, 2021 FIG. 19 St. Louis seed- and early-stage VC deal activity Salt Lake City is already punching way above its weight – in a lot 39 of ways, Utah today is like the Bay Area in the late 1990s. We’ve 36 34 33 had several big success stories, including Qualtrics, Pluralsight, 32 31 Owlet, Lucid and Divvy, among others. Companies like Qualtrics 25 27 and Lucid—which aren’t startups anymore—will help generate the 22 22 next generation of successful startups. 19 0 .4 .7 . We have several fantastic universities nearby, which are 3 .1 8 59 . 3 9 4 $ equipping the next generation of entrepreneurs with the tools 35 4 3 $ 5 1 $ $ $ 8 6 . 2 7. 4. .1 0. . they’ll need to thrive. That includes not only entrepreneurship 8 1 1 4 5 9 104 2 centers but also campus- and VC-sponsored student funds. As $ $ $ $ $9 $ a matter of fact, one of Kickstart’s most promising investments, 1 2 3 4 5 6 7 8 9 * Pura, started out as a student fund investment. The company has 1 1 1 1 1 1 1 1 1 20 1 enjoyed over 1,000% growth year-over-year for the past three 20 20 20 20 20 20 20 20 20 20 02 2 years. Deal value ($M) Deal count KAREN ZELNICK Source: PitchBook | Geography: St. Louis *As of September 1, 2021 Senior Director of Platform, Kickstart Fund 11 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

TAMPA BAY WASHINGTON, D.C. Tampa’s ecosystem is quickly growing, thanks to an influx of tech transplants who have moved here from both coasts. People like Steve Parkis, a former Zynga executive in San Francisco, ashington’s startup market has steadily gained ground over are a good example. Once here, Steve became an investor and the past decade. In 2011, the D.C. ecosystem saw $269.7 advisor in Leasecake, Ideal Agent, and DocClocker, three local Wmillion of seed- and early-stage VC investment, a figure that success stories. Another good example is Ty Blachly, the former would climb above $1.2 billion by 2018. By volume, Washington now chief of staff at Snap in Los Angeles. Once he settled in Tampa, routinely sees close to 200 seed- and early-stage financings per year. he joined the advisory board of Openly HQ. Tampa is home to a range of sectors, from healthcare to FIG. 21 Washington, D.C., seed- and early-stage VC deal activity cybersecurity to business products and services. Local 197 corporations have taken notice of the ecosystem’s potential. 194 185 196 Tampa General Hospital, for example, recently launched a $15 102 161 166 169 170 million fund to invest in local healthcare startups. ReliaQuest, a 7 146 cybersecurity company founded in Tampa, is engaged with local 9. 118 6 startups, making themselves available to answer questions from 2 $ founders, make introductions, and test new technologies. 2 4 5 .4 .1 .0 4 .0 6 .6 . 6 LAKSHMI SHENOY . 4. 3 5. 8 6 7 8 9. 8 51 8 5 9 2 8 0 0 CEO, Embarc Collective 3 4 55 59 8 , 9 8 9 1 $ $ $ $6 $ $ $ $ $ $ ALLIE FELIX Vice President, Platform, Embarc Collective 1 2 3 4 5 6 7 8 9 * 1 1 1 1 1 1 1 1 1 20 1 20 20 20 20 20 20 20 20 20 20 02 2 ampa is emerging as a VC destination. At least 20 seed- and Deal value ($M) Deal count early-stage rounds happen each year in Tampa, dating back Tto 2017. More importantly, the dollar amounts are becoming Source: PitchBook | Geography: Washington, D.C. consistently higher. In 2019 and 2020, a combined $237.1 million was *As of September 1, 2021 funneled into seed-stage and early-stage startups across 47 rounds. For perspective, the Tampa ecosystem recorded just over $11 million in seed and early-stage financings in 2011. Despite visiting more than 40 cities with Revolution’s Rise of the Rest, I am always wowed by the innovation in our own D.C. FIG. 20 Tampa seed- and early-stage VC deal activity backyard. We’ve backed companies you might expect to be HQ’d in D.C. like FiscalNote, which helps organizations track and 26 manage policy issues, but as the startup community here has 23 23 evolved, we’ve compiled a diverse array of D.C. investments. 21 21 One of our more recent investments, Recurate, helps clothing 19 17 and accessory brands build sustainable resale marketplaces for 16 their products. You might think a company like that belongs in 13 a global fashion hub like New York or London, but the team is rapidly scaling right here in our nation’s capital. 8 8 3 6 6 D.C. also reminds us of the critical role policy plays when trying . 9 2 .6 .5 . 8 1 .4 6. .0 .4 3 . $1 5 5. 8. 9 4 13 2 to build transformational companies. While navigating complex 3 13 3 4 9 55 1 52 $ $ $6 $ $ $ $ $ $1 $ regulatory environments often creates challenges for founders, it 1 2 3 4 5 6 7 8 9 * also opens up a lot of opportunities. D.C. founders have a unique 1 1 1 1 1 1 1 1 1 20 1 front row seat to the governing process and all that impacts 20 20 20 20 20 20 20 20 20 20 02 scaling startups. 2 Deal value ($M) Deal count Source: PitchBook | Geography: Tampa ANNA MASON *As of September 1, 2021 Managing Partner, Revolution’s Rise of the Rest Seed Fund 12 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

METHODOLOGY Venture capital dealmaking includes minority equity investments, as PitchBook defines venture capital funds as pools of capital raised for well as investments combined of both equity and debt, into startup the purpose of investing in the equity of startup companies. In addition companies from an outside source. Investment does not necessarily to funds raised by traditional venture capital firms, PitchBook also have to be taken from an institutional investor. This can include includes funds raised by any institution with the primary intent stated investment from individual angel investors, angel groups, seed funds, above. Only funds based in the US that have held their final close are venture capital firms, corporate venture firms, and corporate investors, included in the fundraising numbers of this report. The entirety of a as well as from nontraditional investors such as hedge funds, mutual fund’s committed capital is attributed to the year of the final close of funds, or private equity funds. Investments received as part of an the fund. Interim close amounts are not recorded in the year of the accelerator program are not included; however, if the accelerator interim close. continues to invest in follow-on rounds, those further financings are included. Deal locations are categorized into specific combined statistical areas (CSAs) based on CSA definitions provided by the US Census Bureau. Dealmaking figures in this report reflect seed- and early-stage rounds. For example, the Austin CSA, which is not defined by the US Census Early-stage rounds are generally classified as Series A or B (which Bureau, is a combination of the Austin and San Antonio Metropolitan we typically aggregate together as early-stage) either by the series of Statistical Areas provided by the US Census Bureau. stock issued in the financing or, if that information is unavailable, by a series of factors including the age of the company, prior financing history, company status, participating investors, and more. As for seed, when the investors and/or press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as reported by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed if it is explicitly stated. 13 / Beyond Silicon Valley: Coastal dollars and local investors accelerate early-stage startup funding across the US

ABOUT REVOLUTION Revolution is a D.C.-based investment firm focused on backing entrepreneurs building transformative companies outside of Silicon Valley. Through its family of funds—The Rise of the Rest Seed Fund, Revolution Ventures, and Revolution Growth— Revolution partners with founders at every stage of the startup lifecycle. Follow us at @Revolution and @RiseOfRest. ABOUT REVOLUTION'S RISE OF THE REST Revolution’s Rise of the Rest is a nationwide platform led by Steve Case focused on spotlighting regional startup hubs. The Rise of the Rest Seed Fund invests in early-stage, high-growth companies across the country. The team partners with regional ecosystem leaders and co-investors to build and scale the next wave of transformational startups. The Rise of the Rest Seed Fund is backed by a group of iconic entrepreneurs and business leaders who believe that the next great startups are located outside of coastal tech hubs. Visit us online at revolution.com/rotr or @RiseOfRest.