Drive Capital Didn’t Demand Aver Informatics Move, Investor Says
It was Aver Informatics’ idea to relocate the healthtech startup from Wisconsin to Ohio—not a demand by one of its lead investors.
That’s according to Chris Olsen, co-founder of Columbus, OH-based Drive Capital, a $250 million, Midwest-focused venture capital fund that co-led an $8.5 million Series A investment in Aver in May. Three months later, news broke that Aver is leaving the Green Bay, WI, area to set up shop in Drive’s Columbus office.
Startups have been known to move nearer to their lead investors, but it was “misconstrued” that Drive required Aver to move to Columbus, according to Olsen. He was asked to comment on the situation today during a panel discussion at the Forward Technology Conference in downtown Madison.
In reality, Olsen said, Aver CEO Kurt Brenkus approached Drive and said, “It seems like there’s a nexus of customers in a different part of the Midwest. What do you think about us moving the company?”
Startups have to locate themselves in places where they have the “unfair advantage,” Olsen said. “That might not be where they were founded.”
Xconomy couldn’t immediately reach Brenkus (pictured right) for comment about what strategic advantages he sees from housing Aver in Columbus. He previously told Xconomy that Green Bay was a good location for his company because of the presence of large healthcare insurers like UnitedHealthcare and the talent coming from local universities.
Aver is hiring in Columbus, and Brenkus has already moved there. But the status of Aver’s Green Bay staff is unclear. After the panel, Olsen told Xconomy that Aver’s timeline for completely pulling out of Wisconsin is “a moving target.”
The timing is important because if Aver closes its Wisconsin office and relocates those employees by October, it would have to cough up $267,000 in penalties related to state tax credits it previously received.
“If [Brenkus] has to pay them back, he’ll pay them back,” Olsen said.
Aver’s relocation is significant for the Wisconsin startup ecosystem because the $8.5 million funding round is the largest deal for a Badger State startup so far this year—even more impressive considering it was for a company based in the Green Bay area, which has a small tech community.
News of Aver’s relocation was met with disappointment in Wisconsin, with one of the company’s angel investors suggesting that if Drive poaches more startups, some Wisconsin investors might lobby against continued deal flow for Drive in this state.
Olsen said Drive doesn’t have a “Columbus-driven strategy.”
“Our single-largest investment is in a company in Wisconsin,” Olsen said during the panel, declining to name the company.
In the end, Drive’s basic yardstick is delivering a return for its investors, Olsen said.
“This is not a charity that we’re running,” Olsen said. “We don’t think about how many jobs [get created], where the company is going to be located.”