Sequoia vet Mark Kvamme to step back at Drive Capital, months after firm raises $1 billion from LPs
It was Mark Kvamme—the former Sequoia Capital partner who had led its investment in LinkedIn—who lured Chris Olsen to leave Sequoia and Silicon Valley, move back to his home state of Ohio, and help Kvamme launch a venture capital firm in the middle of the country.
Kvamme, who is also a race car driver, had arrived in Ohio in 2011 to launch the “JobsOhio” program as a favor to his friend, the then-Ohio Governor John Kasich. But he decided to stick around Columbus on the premise that there were companies in the Midwest worthy of his attention—and of venture dollars.
Since then, Kvamme and Olsen have assembled Drive Capital into a more than $2 billion VC firm focused on startups based outside of the Coasts, that now spans 33 people, and has backed the likes of Duolingo, Fast Radius, and Root Insurance. In June, Drive raised a fresh $1 billion—its biggest fundraise yet—across a seed fund and a growth-stage fund from its roster of pension funds, endowments, and other limited partners.
But not long after Drive Capital’s initial capital call, Kvamme, 61, announced this week via a local business newspaper that he is stepping back from Drive Capital and will transition away from fundraising and operations before the firm launches its next fund.
The timing of Kvamme stepping back seems peculiar, as it so closely follows its most recent fund closure, but Olsen assured me that limited partners have been aware Kvamme would be stepping back since February.
“It was something that we had forecasted for… a couple of fund cycles,” he says, noting that this had been the plan since he and Kvamme had founded the firm. “It was certainly not a surprise at all.” (Kvamme did not respond to Fortune’s request for an interview).
A spokesperson for Tennessee’s Consolidated Retirement System, one of Drive’s LPs, said that the team “knew in advance the transition would occur” and said that the pension would “continue to monitor performance along with the rest of the portfolio.” (Four of Drive Capital’s other limited partners didn’t respond to a request for comment.)
Departures of key investment partners often become a point of contention for limited partners, to the point that clauses known as “Key Man” clauses are drafted into limited partner agreements, sometimes giving LPs recourse not to fulfill their funding commitments should a key partner walk. After all, it’s the partners at the top of the firm who have constructed the track record that warrants checks from LPs in the first place.
Olsen says that Drive Capital, prior to this fundraising round, had already made adjustments in its limited partner agreements in preparation for this transition. Drive Capital’s LPAs no longer name any one individual at the firm but are now structured around whether “a number of GPs would leave, or something like that,” Olsen says.
Olsen emphasized that Kvamme’s plans to step back had no impact on the firm’s limited partners’ willingness to join this recent funding round, although it did spawn many questions. “Anytime you see a founding partner depart, I think everyone’s going to ask questions, and rightly so,” he says.
While Olsen was very appreciative of his long-time partner, noting that he is a “great friend” and “one of the most creative minds that I’ve ever had the chance to work with,” Olsen also pointed out how this was the right thing to do for the firm right now. “We have this young generation of folks…There needs to be enough room for everybody to be successful here.”
Some of the partners who have joined the firm are former Livongo director Molly Bonakdarpour and ex-Google employee Nick Solaro. All of the partners must agree on each investment before a Drive Capital GP will write a check, and Olsen said he didn’t like the language of people “leading” deals.
What does Kvamme have planned next?
Olsen says he hasn’t decided yet. Kvamme is still racing cars, and Olsen thinks he may end up doing work for a non-profit or a service-oriented company. Will he stay in Columbus, full-time?
“As far as I know, yeah, he has no plans to leave. His nickname here is the ‘born-again Buckeye,’” Olsen says.
See you tomorrow,
Jackson Fordyce curated the deals section of today’s newsletter.
Correction: The digital version of this newsletter has been corrected to reflect that John Kasich was Governor in 2011, not Mayor.
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FUNDS + FUNDS OF FUNDS
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