Investors might see a better return if they keep their dollars in Oklahoma
By Scott Meacham
Copyright © 2015, The Oklahoma Publishing Company
Sometimes, we least appreciate the things that are in our own backyard.
Take the Oklahoma sky. It’s so big and open and beautiful that if you just glance up, you miss half the impact. If you really want to take it all in — day or night — you can’t just look up, you also have to look around.
Oklahoma entrepreneurship is like that. Sometimes, Oklahoma investors don’t realize the great opportunities for early-stage companies that exist in this state.
It’s one thing when nationally based venture capitalists look at Oklahoma as a flyover state. But when Oklahoma money goes “off-shore” to invest in entrepreneurs, startups, and innovation in Texas, Colorado or California, we need to speak up and remind people to take a good hard look at the early stage opportunities that exist right here before they help create jobs and wealth in some other state.
I’m a former banker. Believe me, I understand that any investor writing a check in return for equity in a startup company wants the best return possible. And that’s exactly why those investors should be taking a second look at the startups with Oklahoma roots.
Not only do we have a strong pipeline of investment worthy companies, but the shortage of investment capital in Oklahoma makes valuations very competitive.
According to the Halo Report (from the Angel Resource Institute at Willamette University), nationally, angel median seed stage valuations have risen to $3.95 million, up 30 percent year over year.
All regions have seen increases in round size. In our region, the median for angel only rounds is $1.5 million. For rounds with angel and non-angel investors, our region’s median reaches $2 million.
OK entrepreneurs scrappy, a bargain
Compared to the rest of the country, you might say that deals in Oklahoma are a relative bargain. More importantly, because Oklahoma entrepreneurs have had to manage with less, they are scrappy. They never have money to burn. They have to learn how to stretch a dime to cover a dollar if they want to survive. They monetize early by signing up paying customers. Bootstrapping is their mantra.
It isn’t that entrepreneurs here are more virtuous than their California counterparts — although there is the Midwestern work ethic.
It’s that Oklahoma entrepreneurs don’t have any choice. They can’t count on deep-pocketed VCs or super angels.
This discipline makes them better entrepreneurs. It’s the kind of discipline that can lead to better results and better returns for investors.
Oklahoma’s SeedStep Angels ranks second in the region in terms of cumulative deals from 2010 to 2015. Oklahoma would benefit significantly from other investors stepping up their participation — either via syndication or sidecar investments — with this active angel group.
And that’s not just the other kind of blue sky.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at [email protected].