Tulsa Angel Investors | The Definitive Guide
So your startup is looking for Tulsa angel investors? BetaBlox has spent months preparing this essay in an effort to provide the most definitive and transparent audit of the angel and venture capital scene that we could. We conducted dozens of hours of secondary research, and hundreds of hours of in-person interviews with Tulsan entrepreneurs and investors regarding the soon to be profiled Oklahoma angel investment groups.
What we’ve found is that entrepreneurs typically run into two problems prior to fundraising for their Oklahoma-based startups:
Problem 1 – Determining Who Is Actively Investing
Apparently, Tulsa angel investment networks that go out of business don’t really care too much about taking their website’s down. Google is littered with entrepreneurship and angel investor resources that have been dissolved, or never really got off the ground in the first place. This makes it hard to figure out who is even in-business. But even if they are in-business, it’s difficult to figure out exactly how active they are. This essay will help with that.
Problem 2 – Determining The Relevance Of The Capital Partner
It’s hard to find out who is actively investing RELEVANT capital into Tulsan ventures. By relevant we mean (a) stage of business and (b) industry specialization. Whether we entrepreneurs want to admit it or not, professional angel investors in Tulsa (and everywhere for that matter) don’t just take pitches and invest based on instinct. Angel investors aren’t as opportunistic as Shark Tank and Hollywood makes them look. All the great ones concentrate on a particular stage of business (idea, MVP, seed, small angel, angel investment group, small venture capital firm, VC, small private equity, large private equity, investment banking). The reason is simple: venture investing takes a lifetime to become great, and each of those aforementioned steps are as different as astronomy and physics. Deal structure, valuation, size of capital raised per milestone, usage of funds, board of directors, liquidation preferences, dilution methodologies; literally everything changes as the business gets larger. Secondly, industry specialization is crucial. Most investors like to invest in industries they know. The more they know, the smarter their choices become, and the more relevant their contacts in the industry are.
Owner at Davis, Tuttle Venture Partners
Executive Director of OII
It would be absolutely impossible to talk about economic development initiatives in Tulsa without bringing up the Oklahoma Innovation Institute. OII is a non-profit umbrella company for a series of assets that add to the innovation community of Tulsa. It was spearheaded by Barry M. Davis, the Managing Partner of Davis,Tuttle Partners – a venture capital firm with strong roots in Tulsa. He was also a founder of The Venture Capital Institute, which taught new entrants into the world of VC on subjects such as venture de-risking, valuation, due diligence, follow-on funding, and more. After many years investing in Tulsa companies, he’s accumulated enough pattern recognition to understand how to reverse engineer the creation of high impact jobs. To do so at scale, he built a team around him, starting with the Executive Director, David Greer. Together, they amassed an all-star Board of Directors with expertise in a multitude of industries.
OII acts almost as an investment think tank, doing gap analysis on innovation holes in Tulsa, creating and funding the initiatives to fill those holes. They fund these financially sustainable initiatives through capital in their own coffers, as well as through outside fundraising from high net-worth individuals, foundations, and corporations. Some of these initiatives are the Tandy Supercomputing Center, Tulsa Regional STEM Alliance, Tulsa Research Partners, The Best Thinking Forum, and most recently – BetaBlox itself.
BetaBlox has been raising money for itself, and for its individual startup companies since its founding in 2012. But we can honestly say that we’ve learned more by watching OII finance our Tulsa expansion than we’ve learned from all those other angel investment experiences combined. Don’t let the non-profit status fool you. They take decades of for-profit venture capital experience and use that experience to structure their initiatives in ways that ensure financial longevity. It’s this discipline that will not only leave a large economic mark on Tulsa, but also a legacy that will last long after the founders hand off the reins to whomever their successors may be.
301 East 3rd Street
Tulsa, OK 74120
P. Vincent LaVoi
Joel B. Kantor
The Mimosa Tree story holds a special place in the hearts of BetaBlox. Their founders, LaVoi and Kantor, grew up next to each other, and would spend time as kids playing around Mimosa Trees in their backyards. Naming the company after this experience is paying homage to their upbringing, and the loyalty that they’ve had together since they were young. This is very similar to BetaBlox’s upbringing. The team that was ultimately responsible for getting BetaBlox off the ground had been friends since early childhood, and although differentiated skill-sets and academic paths split us up for a number of years, investing in early stage entrepreneurship brought us back together – which is what happened to the Mimosa Tree team.
This Tulsa angel investment firm has definitely shown off their breadth of experience. Their first big foray into the scene was the acquisition of two different companies with complementary offerings. After the acquisitions, they merged the two companies, re-engineered their management practices, and sold the asset to an aerospace company. Since then, they’ve invested in what seems like a wide array of entrepreneurial endeavors; tech companies like Saltus Technologies, which powers a product called digiTICKET (digitizing tickets for law enforcement agencies); real estate and restaurants like McNellie’s Group – which powers a great deal of Downtown Tulsa’s burgeoning foodie scene (The Dust Bowl being our personal favorite – but there’s around 10 pub and restaurant assets in their portfolio).
Many people in our interviews cited the investment from Mimosa Tree into the McNellie’s Group as the catalyst for what’s making Downtown Tulsa cool again. These gathering places are creating a platform that makes Downtown life more realistic than it had been in the past. It gives workers lunchtime options, networkers happy hour options, and socialites nighttime and weekend destination spots. All of this is economically stimulating a great deal of businesses choosing to work in and around downtown, which continues pump momentum into Tulsa’s escape velocity as an entrepreneurship city. This paragraph is microeconomic dive into their macro investment thesis: invest in great people, doing great things, that make Tulsa a better place to live, work, and play. To that, we say cheers – because they’re doing a great job!
President & CEO
SVP - Client Services
i2E has been the go-to source for venture financing in Oklahoma for quite some time. They’ve formulated a series of investment funds designed to spur economic activity at different stages of the technology development life cycle. What few people realize is how different of a science investing in a deal that has $100K in revenue is VS a deal that has $1M (as a general example). Most think the sole difference is the amount invested, but this couldn’t be farther from the truth. Deal structure, guidance, mentoring, rigor of due diligence, and a slew of other variables drastically change as the stage of business changes (both on the entrepreneur’s and investor’s side of the table). Because of these differences, entrepreneurs in Oklahoma are required to eventually navigate the waters of what would be considered an angel investment round, and then eventually a venture capital round. The beauty of what i2E has built is a vertically integrated venture investing pipeline that can help entrepreneurs at either of these general stages, and can grow with the entrepreneur as the business expands. We like to think of it as an in-house assembly line that can start working with you relatively early in a company’s development, and then move you down the line to other investment products as they become needed. There are three main funds, the Accelerate Oklahoma! Fund, the Oklahoma Seed Capital Fund (OSCF), and the SeedStep Angels (slightly different model, and profiled below).
Before we profile the individual funds, a quick note that they each reach “co-investment”, or matching funds. In other words, if you’re looking to raise $250,000, and you’ve already found a committed lead investor for the first half, they would be interested in talking to you about matching the first investment of $125,000, getting you to your total fundraising goal. From an economic development standpoint this is an incredibly disciplined strategy. The main reason is it brings private angel investors out of the woodwork because they feel they can invest alongside a group that’s being doing it for a long time, and is thus de-risking the opportunity far more than they could alone. Needless to be said, every new angel investor that Oklahoma can breed, the better. i2E is an important state-wide tool for doing just that.
1. Accelerate Oklahoma! Fund
Funded by the federal State Small Business Credit Initiative (SSBCI), this fund aims to invest in high potential startup companies, add gasoline to growth stage ventures, or help larger companies with expansion capital. Like the soon to be described OSCF funds, Accelerate Oklahoma! Fund is a co-investment model where the entrepreneur must bring to the table at least half of the required funds.To date, this product has invested $11.2M of $13.2M.
2. The Oklahoma Seed Capital Fund (OSCF)
-Investment size ranges from about $100,000 to $1,000,000
-Typically in the form of a convertible debt or preferred equity
-Requires matching funds from active private investors.
The SeedStep Angels is a group of high net-worth individuals that gather on a monthly-ish basis to hear companies pitch. The individuals then decide if they want to buy-in, and if so they do so on a personal basis, not necessarily as a group. Their mission is to help fill the capital gap at the seed stage, which they define as $250K-$5M. They’ve outsourced their due diligence and management to i2E. This means the application process, and vetting of the companies is done by i2E. This is smart because it lowers the threshold of what it takes to become an angel investor; meaning that aside from being wealthy (and accredited), a good angel also has to have the time to properly curate a portfolio. Curating a large enough portfolio with properly researched companies is a full-time job that most people interested in angel investing simply can’t do. This system allows angel investors in Oklahoma to diversify their assets out of the more traditional investment vehicles, and into the early stages, without having to make angel investing a 40+ hour a week ordeal.
These two foundations aren’t exactly angel investors in the traditional sense of the phrase, but it would be irresponsible not to mention them. Their generosity and interest in the entrepreneurial renaissance happening in Tulsa transcends that of a typical for-profit angel. We have also chosen to mention them together, despite both of their stories deserving individual attention, because of their most recent collaboration: 36°North. 36°North is a state-of-the-art coworking facility in Tulsa’s Brady Arts District. It opened in early 2016, and is acting as “Tulsa’s Basecamp For Entrepreneurs”, a very apt description. GKFF and LTFF, amongst others, were the lead financial and sweat-equity supporters of the coworking facility. The profiled leaders above, Aaron Miller and Elizabeth Ellison, worked with other community leaders (hat tip to Dustin Curzon and others) to take the project from a vision and turn it into a reality.
Although these foundations’ founders have obviously done private angel investing in Oklahoma, they tend to steer the bulk of their philanthropy into bettering Tulsa’s triple bottom line.
GKFF also has Argonaut Private Equity, which is their foundation’s later-stage PE fund, which mostly invests in deals that are much farther along than the type of entrepreneur that is probably reading this essay.
The Lobeck Taylor Family Foundation in particular has taken a keen interest in the entrepreneurial community, leading and sponsoring such initiatives as Cultivate918 and Kitchen66.