i2E is in the business of helping grow small business in Oklahoma.
Before we can help young companies grow, we first have to help them survive those first few critical years after startup.
More than half of new businesses fail in the first four years. Research indicates that this high failure rate is caused primarily by lack of proper planning and lack of capitalization.
It's not surprising, then, that angel investors, like those who are members of Oklahoma's SeedStep Angels, are known to have a positive effect on the success and growth of the companies they fund. A Harvard study indicated that the participation of angel investors increased new firms survival rates by 27 percent.
First, angels are the primary source of risk capital as venture capital funding for seed and early stage companies continues to decline.
Second, angel investors also tend to be hands-on, helping mitigate the risk of investing in startup companies by providing mentoring, business contacts, and planning, industry, and functional expertise.
Rod Whitson, a native Oklahoman who returned home after working and angel investing in California for several years, is a charter member of SeedStep Angels. In just three years, Oklahoma's SeedStep Angels has invested $1.5 million in 12 Oklahoma companies.
“There are real deals in Oklahoma and real returns in angel investing.” Whitson said. “The angel deals that we are seeing — especially those companies that have come through i2E's rigorous coaching and vetting process — are as high a quality as I've seen anywhere.”
Tom Evans, manager of Private Partners Opportunity Fund (PPO Fund), an Oklahoma angel venture fund that invests independently and as a member of SeedStep Angels, represents a group of accredited investors from the northwest region of Oklahoma.
“We are a for-profit group of accredited investors,” Evans said “We believe that as we create wealth, we create jobs. It's exciting. Through SeedStep Angels, i2E opened the door to things we never would have been involved in. In our part of the state, we are agriculture and oil. To have the opportunity to invest in a life sciences company founded by an entrepreneur who has been doing the research for five or 10 years — that's incredible.”
The capital and expertise to create more startup companies is here in Oklahoma. We need to put it to use.
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 i2E_Comments@i2E.org.
DID YOU KNOW
In third quarter of 2012, the median angel investment round size reached a five-quarter high of $640,000.