Ohio's Drive Capital moves forward as co-founder Mark Kvamme takes detour

"Ohio is where venture capitalists go to die, and you're not ready to die yet."

• That's what Mark Kvamme says he was told by a friend in 2012, when he and fellow Sequoia Capital vet Chris Olsen launched a Columbus-based firm called Drive Capital.
• Since then, Drive has amassed $2.2 billion in AUM, backed several unicorns and expanded its two-person team to nearly three dozen.
• But 2022 has become a year of transition (some say turmoil) at Drive, headlined by Kvamme's recent decision to step back from day-to-day operations.

Why it matters: Ohio's tech ecosystem has come a long way since Drive first opened shop, including Intel's $20 billion plan to build a chipmaking fab in the state. Drive, however, remains by far Ohio's largest homegrown venture firm, able to attract outside co-investment but not new neighbors.

State of play: Business Insider last week reported that Kvamme was "raising" something akin to an Ohio-focused sovereign wealth fund.

• This came as news to Drive's limited partners, who'd been told that Kvamme not only would remain a general partner with Drive's current fund, but also that he'd signed a separation agreement that would prohibit him from raising a competitive fund to Drive.
• The firm sent out a letter to LPs, which was first reported by TechCrunch. It included the line: "All of us at Drive were surprised by this news."
• Olsen and Kvamme called me together yesterday, with Olsen saying that Drive's surprise wasn't that Kvamme was considering this new effort, but in the report's suggestion that he was actively fundraising.
• Or, as Kvamme put it: They were not aware I was officially fundraising [because] I am not... I'm just talking to folks about the potential of the fund and getting peoples interest in the possibility." He adds that he's always been intrigued in aiding Ohio's economic development by forming the idea of something like Temasek, but that he believes it would need to be funded by Ohio individuals and institutions.
• Kvamme, a longtime friend and ally of former Ohio Gov. John Kasich, also acknowledges that he's had informal talks about running for public office, possibly as a challenger to Sen. Sherrod Brown in 2024.

Elsewhere: Drive also has lost a pair of longtime execs in recent months. Former COO Yasmine Lacaillade recently launched SineFine, a VC fund-of-funds focused on women-led firms, while partner Bob Hatta left in August.

LP reax: I spoke with three limited partners in Drive funds, each of whom was under the impression that Kvamme had begun cutting back before his formal announcement.

• None had prior knowledge that he was considering the launch of "The Ohio Fund," and two felt that Drive's LP letter added to their confusion (although they didn't seem too bothered).
• Drive Capital's original limited partnership agreements included "key man" provisions were either Kvamme or Olsen to leave the firm, but it's since been expanded to require a larger number of individuals to depart.

The bottom line: Drive, once viewed as a novelty, is now an institution with more than a decade of history. And the growing pains that go with it.