How We Started a Venture Capital Fund in Oklahoma
Behind the scenes look at starting a first-of-its-kind VC fund in the middle of a pandemic
In this “behind the scenes” look, I will share some of the inspiration for Cortado Ventures, what led to its formation, and how we built what is now one of the most active venture capital funds in the Midwest.
I remember telling my daughter, “remember this moment, it will go down in history.” We were leaving the Thunder basketball game on March 11, 2020, after it had been cancelled. Covid really hit home that day, the same day we learned that Tom Hanks had Covid, the World Health Organization (WHO) declared a pandemic, and President Trump suspended travel from Europe. Now there’s a documentary about that day. That was a turning point for all of us.
The idea to start a venture capital fund in Oklahoma first came up in 2017 as Mike Moradi and I discussed the need and the opportunity. At the time it was idle chit chat with others including Joshua Fahrenbruck. That same year Mike and David Woods had a similar conversation. The stories of talented entrepreneurs leaving the state were already happening, and the interest in developing a more diversified state economy was growing. The entrepreneurial ecosystem was developing with many great resources, like university entrepreneurship programs, Thunder Launchpad, 36 Degrees North, StarSpace46, and others. The opportunity and need were building for a founder-led private sector venture capital firm to invest in early stage technologies. Our intuition and the data were matching up.
Mike and I met over a decade ago as part of the Downtown Club of Oklahoma City, though got to know each other more in recent years when he (successfully) nominated me to join the Young Global Leaders program of the World Economic Forum (WEF). I started that program in the summer of 2019, and my eyes were opened to world-changing ideas, frontier technologies, and entrepreneurs who were building and investing in the future. Looking back, I can give much credit to the inspiration I got from the WEF and the connections I made and continue to make.
It was in early 2019 that my partners and I met about venture capital in Oklahoma. David Woods had been CEO of Ditch Witch and for the past 15 years started and successfully grew a unique consulting firm, and Mike Moradi a serial entrepreneur in biotech and materials and a venture capital expert. For years I had been angel investing, advising entrepreneurs, and working in economic and workforce development. What my partners and I have in common is we have all built our careers and companies in Oklahoma in different sectors, but with a global mindset. This is important when what you do is invest in entrepreneurs building companies in the earliest stages in regional sectors. Cortado has much the same culture as the startups in which we invest: quick, creative, resourceful, and adaptive. We also decided to focus on investing in areas where we can have an impact and have domain expertise.
By February 2020 we had decided to launch Cortado Ventures. I made plans with my partners at Antioch Energy that would enable me to eventually transition to full-time with Cortado, and remain thankful for their cooperation. At the time, we planned to launch Cortado to coincide with the Rise of the Rest tour in April. So in early March we pressed ahead with the legal paperwork to make Cortado official. It was the proverbial “best of times.”
Then March 11th happened. Then the schools and businesses closed. I made a plan about what I would do for the two weeks that everything would be shut down. Two weeks…feels silly to say it now. Two weeks turned into a month, and we had to decide whether Cortado would be on hold. Ultimately we decided to forge ahead with launching Cortado, not in spite of Covid, but because it would be needed more than ever.
With the pandemic threatening Oklahoma’s economy, more attention than ever was placed on the need to diversify our economy and create future-ready tech jobs. There was also a sense that innovation and startups would multiply, and that technology disruption and adoption would accelerate. In fact, we contend that there has never been a better time to start a new company. Our investors sensed this too.
We finished our legal formation in April and began sharing our initial pitch deck with insiders who had been tracking what we were up to. The first limited partner (LP) investment into Cortado Ventures came in early May, and plans for a public launch came together. Erika Lucas was one of those insiders, and she was gracious to visit with me on her podcast as part of our public launch. Also around that time, I contacted the Journal Record, and they immediately connected with our story. The date for our launch was set: May 26.
By the time our front-page story in the Journal Record and our Stitch Crew podcast came out, we had quietly raised the initial $2M of our $10M goal. We focused the first months of our raise on our initial circle of friends and colleagues who had some knowledge of what we were doing. Investors appreciated our deep roots and sector expertise in Oklahoma, our edge as founder-operators, and our focus on areas that we know. It became apparent through our meetings that another advantage was emerging for Cortado Ventures: our own investors. Our scores of LPs are mostly owner/operators, CEOs, founders and entrepreneurs in Oklahoma, working in the very sectors in which we invest. Not only would they become a great resource for deal sourcing and vetting, but also for customers and partners. On this we built our demand-driven model whereby we test for product-market fit of the tech we review with our own investors.
It was clear by August that our thesis and plan were resonating, at that point having already raised our $10M goal. The investment community was on board, reaching that point in 10 weeks instead of the expected 10 months. Meanwhile, we were tirelessly sourcing and reviewing opportunities, and started investing in the first few portfolio companies. Everything we do is ultimately about the companies in which we invest. They create value and push innovation. Their early success validates our reason for founding Cortado Ventures.
In September we extended our raise to $15M with a hard cap at $20M. We were adding advisors every month, and starting to add to our part- and full-time team now that I had become 100% full-time. It was the culmination of months of planning. The buy-in was really overwhelming and we were so fortunate to pick up the dream team in every area. Some familiar faces joined us from Antioch Energy, including Michelle Ferguson and Wayne Brown. Blake Bixler joined as Entrepreneur In Residence, and later Susan Moring as Associate — both rock stars who brought the perfect skill sets and shared vision.
Cortado entered 2021 with a full team and set of advisors, more than $17M raised, and eight portfolio companies with outstanding traction. By that point we were bringing in investors who were referrals from other investors, and circling back around to others for whom the earlier timing was not ideal. We had also cast a broader net to find investors outside our circles and friends of friends. The idea was to not only leverage a substantial network within Oklahoma, but to connect to the broader region and other markets. We find tremendous deal flow from our investor network as well as other venture capital firms throughout the country.
As we approached the one-year anniversary of that ill-fated Thunder game on March 11, Cortado hit the $20M hard cap. We also announced our Tulsa office, scout program, and next two portfolio companies (here and here). None of us could have imagined how quickly this came together, or how well the story and vision would resonate with stakeholders. The support means that we are able to focus on what we do best: source, validate, invest in and support early stage technology companies in our areas of expertise.
Lastly, if you are an Oklahoma entrepreneur building a technology-enabled B2B company, please reach out to us. If you are an investor with interests in our geography or industry verticals, please join our AngelList syndicates. If you are a policymaker, we ask for your support of Senate Bills 915 and 922. And if you are a citizen of our great state, we would like to say THANK YOU for your support!