Steve Case’s VC Firm Moves Into Direct Real Estate Investing
(Bloomberg) -- Steve Case’s Revolution LLC hired real estate investors Starling Cousley and Clint Myers to develop properties for startups in U.S. regions overlooked as potential tech hubs.
Cousley and Myers will join the venture capital firm as partners and take advantage of new tax incentives for investing in “opportunity zones,” according to a statement released Thursday. These are lower-income areas eligible for a range of benefits, including one that exempts investors from paying income taxes on capital gains.
“Most of the real estate companies tend to focus on the big gateway cities like New York or Washington, D.C., and usually don’t have a secondary focus on some of the cities we’ve visited,” said Case, chief executive officer of Revolution and co-founder of AOL, in a phone interview. “That’s created an opportunity to try to get more capital out of the coastal markets.”
On Case’s radar are cities including Pittsburgh; Phoenix; Birmingham, Alabama; and, in Tennessee, Nashville, Memphis and Chattanooga.
Some cities “have fallen by the wayside in the last half century,” Case said. “There’s been a huge brain drain.”
Revolution has invested in real estate indirectly, most recently backing workplace-services provider Convene. This is the first time the Washington, D.C.-based firm will make direct real estate investments. The opportunity zones will be a focus of Revolution’s investments, said Case, who helped champion them.
Rise of the Rest
Case, who founded Revolution in 2005, has long said venture capital firms should look beyond Silicon Valley, New York and Boston. In 2011, the firm started the Rise of the Rest program, which features a bus tour of cities on the rise, notching 38 so far, from Salt Lake City to Portland, Maine. Last year, Revolution launched its Rise of the Rest Seed Fund, which makes early-stage investments of $100,000 to $1 million. Revolution is “positioned to deploy $1.3 billion of investment capital” to back startups, it said in the statement.
Carlyle Group Inc. Co-Executive Chairman David Rubenstein, who hosts a show on Bloomberg TV, and former Hewlett-Packard CEO Meg Whitman are investors in the fund, as is Michael R. Bloomberg, founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, according to Revolution.
“Some of these startups might become Fortune 500 companies of tomorrow,” said Case, who sees the initiative working on projects similar to The Tomorrow Building, a historic property in Chattanooga that leases out flexible co-working and co-living spaces to entrepreneurs.
Cousley was a managing director and fund manager with Hines. Myers also joins Revolution from Hines, where he served on the firm’s internal proprietary research group. The two start next week, reporting to J.D. Vance, managing partner of the seed fund.
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