AOL founder Steve Case is doubling down on his bet that the future of startups is outside Silicon Valley. Here's what entrepreneurs from the heartland need to know about his VC's second $150 million fund.

• AOL cofounder Steve Case's Rise of the Rest fund emerged from a series of bus tours across the US to look for startups outside of Silicon Valley, New York, and Boston.
• The first $150 million fund has already backed nearly 130 companies in more than 30 states, with the support of high-profile investors like Jeff Bezos, Ray Dalio, and Meg Whitman.
• Next month, Case's Revolution investment firm plans to host a CEO summit in Washington, DC, to share what is working for entrepreneurs in cities that are generally overlooked by venture capital.
• Case and Rise fund managing partner David Hall told Business Insider how the program is helping home-grown startups across the country, and what it will take for businesses to land investment in the next fund.
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According to a popular proverb, if you want to go fast, go alone; if you want to go far, go together. According to the example of Steve Case, if you want to go big, go by bus.

On Monday, the AOL cofounder and CEO of the Revolution investing network announced the second $150 million Rise of the Rest seed fund, less than two years after the first.

The place-based investing strategy focuses on startups outside the coastal hubs of San Francisco, New York, and Boston, and was born out of a bus tour Case organized after reading about overlooked US cities and towns in the book "Hillbilly Elegy." (The book's author, J.D. Vance, is a managing partner for the first Rise fund.)

Since 2014, Case has traveled to 43 cities on the Rise of the Rest tour bus. Each tour hit five cities in five days, culminating with a pitch competition. The winning local startup of each tour received a $100,000 investment and joined the seed fund program.

"Most venture funds raise another fund three or four years later, so the fact that we started this in less than two years is, I think, an accomplishment," Case said in an interview with Business Insider.

"From the time we first started reaching out to existing investors to the time we did the final close was just like three or four months, which is a lot shorter than most funds," he said.

In addition to recommitting with the majority of investors from round one (like Amazon's Jeff Bezos, Bridgewater founder Ray Dalio, and Quibi CEO Meg Whitman), others who had been on the fence (James Murdoch of Fox and Brad Smith of Intuit), jumped in for round two.

At a time when nearly three-quarters of venture funding is concentrated in just three US metro areas, the Rise fund's heartland investing thesis (and it's competitive target IRR of 20%) has found an enthusiastic reception from some savvy capitalists.

The first fund exceeded expectations

Rise fund managing partner David Hall said Revolution had about a four-year timeframe for its first round. Both the supply of promising startups and demand for seed-round capital led to backing nearly 130 companies sooner than anticipated.

"We still have a significant amount of the capital remaining in the first one to continue to support and kind of do follow-on investments in those initial companies that we've invested in," Hall said in an interview with Business Insider.

The Rise fund's model is to continue investing in these companies as they meet momentum markers such as quickly growing revenues, gaining market share, and hiring.

"How many people the company's able to start to bring in as employees and staff from some of these rising markets is important," Hall said. "It's a way of saying that they're building the right type of infrastructure to scale."

Another important momentum marker: how and from whom these companies gain follow-on investments. "Are they able to get top-tier regional and coastal venture capitalists to affirm their trajectory as they continue to scale?" Hall asked.

Since the fund looks outside of major coastal cities, companies are often based on the regional market - like a music startup in Nashville, manufacturing in Detroit, and freight data in Chattanooga, Tennessee.

Hall said that looking outside traditional hubs has helped diversify overall investments, and that 45% of funding has gone to women founders and founders of color.

Hall pointed to a wave of startup ecosystems in local communities across the US that are creating jobs and bringing college graduates back to their hometowns, instead of sending them out to major coastal cities.

"We see it as such a huge growth engine for the future of the US economy," Hall said.

And Case says the fund has already given rise to its first unicorn in an unlikely place for unicorns: Michigan.

Detroit-based StockX, which bills itself as the "stock market of sneakers," allows enthusiasts of footwear and collectibles to auction unique items that the company vets for authenticity.

"StockX just raised $200 million at a billion-dollar valuation and has 900 employees in Detroit," Case said. "When we invested it was around an $11 million valuation, and they had half a dozen employees."

The Land-and-Expand venture strategy

The second fund will follow the same land-and-expand strategy as the first, with another $150 million in funding and more bus tours and pitch competitions (dates and locations have yet to be announced).

Half of the fund will be for initial investments, and half reserved for follow-on investments. The second fund will also allow Revolution to continue using the initial fund's balance to double down on winning ideas from round one.

"We really see the second fund as the successor to the first fund," Hall said, adding they expect to find "more and better companies to back along the way."

The first Rise fund is averaging 40 investments per year, which means that Revolution takes a smaller stake in each startup (about 10%). That stake is augmented by partnering with regional venture funds who handle board responsibilities and more of the advisory functions.

The partnerships help to elevate visibility and broaden startups' networks, and Case says regional VCs see Rise as a value-add instead of a competitor.

Case said the laws of supply and demand mean that some firms are undervalued simply as a function of their geography, since it can be harder to generate the same investing momentum in lesser-known markets.

"There is an opportunity for very compelling returns because of that kind of valuation arbitrage," he said. "The challenge is to figure out a smart way to cover a lot of territory, because the country is large. That's why we built out this network of 200 co-investors."

And while some of the companies make sense in their market, like robotics in Pittsburgh, healthcare in Minneapolis, or logistics in Chattanooga, Case said that some of them are like StockX. "There was no particular logic why that would be in Detroit. But it turned out terrifically," he said.

"We recognize that entrepreneurship can happen anywhere," he added, "so we try to stay flexible in terms of our target."

The key, Case says, is to "keep your eyes open and have broad peripheral vision."

What it takes to get Rise of the Rest funding

Hall said Rise typically invests in companies that have raised over $1 million in total capital.

"We are so well-networked in a lot of cities, we know about the startup often before it's raising its hand," he said.

If startups and small businesses want a shot at Rise backing, first they must be tackling big problems. Hall said they look for businesses that are leveraging technology to be disruptive in a "big and broken, existing category," such as transportation, healthcare, or financial services.

Rise found one such company during one of its bus tours. Chattanooga-based Freightwaves, which provides news and data for the logistics industry, won the Rise pitch competition and is being hailed as the Bloomberg of trucking.

"They were attacking the industry and really gaining market share by being the best data provider in the freight industry," Hall said.

Rise also looks for companies and founders with deep networks.

"Those entrepreneurs, those companies that are very well networked inside their city are the ones that can get those early customer wins," Hall said.

Catalyte, another Rise-backed company based in Baltimore, Maryland, is building up a workforce of software engineers and developers. Hall said it was a highlight to see the company preparing talent for the next generation of jobs.

According to Case, the most important thing for entrepreneurs is that they look for funders who bring more than just money to the table.

"You have to bring in the right investors, because it's not just about money," Case said. "It's about the help they can provide, whether it be visibility, credibility, opening doors, potential partnerships, or helping to hire key executives."

"That really is the core role of a venture capitalist," he added. "Sometimes there's too much focus on the checks they write, and not enough focus on the value they provide."

Building on that additional value, Revolution plans to host a CEO summit in Washington, DC, in November to share what is working for entrepreneurs in cities that are generally overlooked by venture capital.

While you could take a plane or a train to attend, you'll certainly see the US differently if you make it a road trip.