Facing a packed audience at Clayborn Temple, Memphis-based startup Soundways received the ultimate vote of confidence from Steve Case, co-founder of AOL and Chairman and CEO of Revolution, a D.C.-based venture capital fund.
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As the winner of a $100,000 investment from Revolution, Soundways leads what Case calls the third wave of entrepreneurship. This wave favors the startup ecosystems that lie inside the coasts and are often neglected by Silicon Valley backers. Case and other Revolution partners are supporting emerging ecosystems on the Rise of the Rest bus tour, which brings top-shelf investment to lesser-known cities. The tour stopped in Memphis on May 8 for a pitch competition.
Last year, 75 percent of the nation's venture capital was invested in only three states: Massachusetts, California and New York, Case said in a panel discussion preceding the pitch competition. This limited investment approach keeps unheard voices — and potentially scalable businesses and necessary solutions — out of the larger startup conversation. High-growth companies are able to start and scale anywhere, and can create jobs in the communities that need it most, Case added.
"If we want to have a more inclusive startup economy, we have to back startups in all places ... Led by all people," Case said, pointing out that Memphis could be a model for its city-wide emphasis on fostering diversity with startup programs such as EPIcenter and accelerators for women-owned and minority-owned businesses led by Start Co.
Case visited Memphis with a cadre of leaders of entrepreneurship, including John Hope Bryant, Chairman and CEO of Operation HOPE, a financial literacy nonprofit with several branches in Memphis; and J.D. Vance, author of Hillbilly Elegy and managing partner of Revolution.
“How many Steve Jobs have we never met that are in these neighborhoods?” Bryant said of emerging communities like Memphis.
Soundways, which provides audio software solutions, was one of eight Memphis startups participating in the Memphis pitch competition. MedHaul, B-G Innovative Safe Systems, Sweetbio, HelloHome, Workbay, Tradelanes and DEV/CON also participated.
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Case pointed out that Memphis, the city where Holiday Inn and FedEx were founded, often falls back on a narrative of entrepreneurship. But that narrative is aging as these businesses were founded nearly 40 years ago. The next wave of innovators is already present in Memphis. They just need the right resources and a dose of confidence.
"I think there's been enormous progress [in Memphis] in the last three or four years, but there's still a lot of work to do. It's important to drive more collaboration and partner startups with big companies," Case advised.
Leslie Smith, president of EPIcenter, said that Revolution’s investment in Memphis is “a huge verification and validation” of Memphis’ work.
“I do think it means we're investable. I think it means that we've built the quality of our pipeline and portfolio to a level where funders of national prominence are interested. I don’t think that's always been the case,” she said.