You probably know Steve Case best as the man responsible for America Online. But two decades later, Case is continuing the charge to help the new generation of technology and business leaders define the critical path of Internet and innovation to become much more useful to society.
In Case’s new book, The Third Wave, he describes three waves of innovation. The first was the adoption of the Internet; the second, the connectivity that comes with social media; and the third, will be technology pervasively integrating into our lives to solve real-world problems. In order to fully realize the third wave, Case argues that investors, corporations, and cities will need to cultivate problem-solving outside of Silicon Valley and create a business environment that no longer overlooks the fact that communities are usually more than equipped to solve their own problems.
“Having more entrepreneurs with different backgrounds and perspectives working to build significant companies in this third wave is particularly important,” Case says. “The risk to cities, organizations and companies without a focus on inclusion is significant. We know that it is the right thing to do, but more important it is the smartest thing to do to drive innovation.”
Case believes that to turn the tide, we need to support innovation outside of Silicon Valley to create a more equitable playing field. He argues that business leaders, and local policymakers must look to strategic partnerships that bring everyone to the table to solve major issues in their own communities.
The current numbers show how hard this will be: 78% of venture capital dollars are highly concentrated in California, New York, and the Massachusetts/Washington, D.C. corridor. Of those dollars, a whopping 97% of funded enterprises are run by white men; less than 3% goes to female founders and a paltry 1% goes to companies ran by people of color.
Scaling regional investment, cultivating public/private investment, and democratizing the innovation industry is what Case believes will be the key markers for emerging cities to attract diverse talent and capital to grow startups that disrupt real-world sectors like health, education, transportation, energy, and food.
Last summer, the billionaire entrepreneur and investor hit the streets on his Rise of the Rest bus tour, making stops in more than 16 northeastern cities to meet with startups, investors and policymakers to understand the growth needs of each local entrepreneurial ecosystem. In each city, Case hosted a pitch competition, open to the public, which awarded a local startup $100,000 in investment funding. The aim of the tour, which will operate on the west coast this year, is to “invest in ideas and people that can change the world.”
Case and his wife Jean recently joined the investor pool at Village Capital—a venture development organization that, since launching in 2009, finds, trains and funds entrepreneurs working to solve global challenges, and has an affiliated $17.7 million venture fund. This year, the organization introduced VilCap Communities US, an experimental venture capital model training investment leaders to fund and accelerate diverse entrepreneurs in their local, and often overlooked communities.
“I think what we have in society is a very large amount of dollars going to a very small group of people who are investing in an even smaller group of people who are solving problems that really aren’t related to having a positive impact on society,” says Ross Baird, CEO and founder of Village Capital.
“When you look at problems like healthcare or food systems, people who have problems getting access to resources understand their problems a lot better than people who live in places like San Francisco or New York City and make a lot of money,” says Baird. “People with great ideas don’t often get a chance. We’re trying to make it so that every entrepreneur gets a chance to solve problems for their community.”
The VilCap Communities program’s inaugural pioneering class of 16 cities comprised of organizations and accelerator programs spanning from Honolulu to Fresno to Baltimore and several underserved markets in between. The leaders were asked to commit to a minimum investment of $50,000 in local ventures and had a shot at receiving an additional $25,000 in program support from the VilCap program.
“There’s a context to think about in what’s happening as the Internet and technology become more pervasive in our everyday lives. The rules of innovation ownership need to change,” says Case. “We need to have a bias towards leveling the playing field, and developing companies that are more purpose-driven. Different dynamics will be driving innovation and I want to make sure that these are the things people are aware of.”