Managing Partner, Cortado Ventures | Director, Antioch Energy

"Backing Entrepreneurs who are driving innovation for Oklahoma’s Future."

- Nathaniel Harding

Nathaniel outlines what he looks for in a start-up

Talk Takeaways

Nathaniel Harding talks about the growth and development of Oklahoma over the past years and how it’s lively startup ecosystem drives entrepreneurs and early-stage companies. He also shared his interesting entrepreneurial background and how he brings his experience from the Air Force into the companies that he built.

About

Nathaniel Harding is Managing Partner of Cortado Ventures, an early stage venture capital firm investing in growth-driven technology companies. He is also Board Member for Antioch Energy. He is an accomplished senior executive, entrepreneur, technologist, thought leader, and community advocate. Nathaniel was named a Young Global Leader by the World Economic Forum, and a Most Admired CEO in Oklahoma by the Journal Record. Previously, he and his partner developed a midcontinent resource play which they sold in 2013 for $120M. His broad areas of expertise include operational strategy, financial modeling, statistical analysis, leveraging big data, connecting science with commercial strategy, energy, fundraising, and public speaking.

Nathaniel graduated cum laude from the University of Oklahoma with Russian Language and Mechanical Engineering degrees, and earned an MBA from Oklahoma City University. Before turning 30, he was selected to all three “40 under 40” outstanding achiever lists in the state. He is a decorated Air Force Captain and veteran of Afghanistan, where he was embedded with the US/NATO headquarters in collaboration with the Afghan government. Nathaniel has published in multiple industry publications in the US and China, the latter as part of his Beijing-based joint venture with major Chinese companies.

Throughout his career, Nathaniel has collaborated across diverse community networks to solve local challenges. The Governor appointed him Chair of the Council on Workforce and Economic Development, managing $20M/year to train and connect the most vulnerable Oklahomans to employment. In 2010 the Mayor appointed Nathaniel to oversee $777M in city infrastructure and quality-of-life projects. He is a trustee for several organizations impacting education, economic opportunity, health and social equity, in addition to mentoring students in STEM fields. He has been a Miss Oklahoma judge, track national champion, Russian orphanage translator, political party National Vice Chairman, and local TV talk show host.

The full #OPNAskAnAngel talk

Jeffery:
Welcome, Nathaniel! Thank you very much for joining us today. We are at, I’m going to just pick a number because I can’t remember the exact number, but this is somewhere in the 50 range of interviews, and we’re very excited to have you here today at Ask An Angel, which is part of our supporter fund series, and really excited that we get the chat. We chatted a few times prior before but there’s a few things that I really enjoyed about our conversation and kind of what you guys are doing, but before we jump into all of those, maybe we can get you to give us this a bit of a background on yourself. So kind of where you’ve come from, I guess where you’re at now, and the things that you’re looking to do, and then one thing about you that nobody will know.

Nathaniel:
Sure, so yeah, thanks for having me and you know, for the questions. And so you know, something you know as far as my background you know, I’m actually an engineer by training, and an entrepreneur really throughout my life. My first company I started in college. Although my first time making money was in middle school, but you know we were not incorporated. So I can’t count that. You know, we’ve been a lifelong entrepreneur. I’ve also worked for larger companies and so kind of earned my stripes in engineering with a larger, actually a Alberta based company named [ inaudible 1:24 ] but then continued my path. You know took over the failing business and grew it to record levels, and we actually sold that business. So the past six years I’ve been you know business owner, an angel Investor, an advisor, an appointee in economic development, and then most recently started Cortado Ventures this year. And then something about me that was the other thing, right? Something that we know, we all know. That’s the- that’s a good one. So I actually, I think you know, probably some.. well, I have five older brothers. A lot of people are really surprised to hear that I have five older brothers and we all did different things, right? So some of us have a you know, we have an engineer. We have you know, banker. We have somebody in Hollywood you know, that’s doing computer graphics for blockbusters. And so I think maybe through that, I kind of saw all the different things that people do, you know, for a living and maybe that I feel like they may have opened my eyes a little bit to all the different things I can be involved in.

Jeffery:
Any sisters or just the family of five boys?

Nathaniel:
Just the five boys. So well six boys still with me and so yeah. My poor mother is kind of you know, we had different backgrounds you know kind of. It was a combined family and so I think that was a lot of fun growing up. I never really knew that they were you know, I just kind of assumed that everybody had a bunch of brothers growing up, and kind of figured out later that was pretty special for us.

Jeffery:
Oh, that’s amazing! I have three other brothers. So I’m a family of four boys as well. So you’re obviously got the five but it is a different dynamic, and the little town I grew up in there was two other families that also had families of four boys. So we actually all hung out together just because there are so many similarities, and as odd as that doesn’t sound like, you would just hang out with anybody, why you’re attracted to some family that had four boys as well. Did you guys face that as well? You’re like, “We’re so different. We better find a family of four guys or five guys to hang out with”?

Nathaniel:
Yeah. You know, we can only go to places that had like you know, didn’t have any fine China and that you didn’t have anything breakable, right? (Laughs) So yeah, the neighbor- neighborhood kids you, know definitely.. we spent most- more time outside. So we got along with people that we’re good with. Just being outside and kind of roaming around the neighborhood.

Nathaniel:
That’s awesome! Well I want to touch base on this one job that you had that you were making money that you didn’t qualify as being a government-based company I guess, or maybe give us a little idea of that because those are always exciting stories and they really do help depict kind of the person that’s in front of us, and what the the great things they’ve been up to.

Nathaniel:
Well it might be, it’s probably not what you’re expecting but maybe that makes it more interesting. I don’t know but.. so I was in middle school and this is- this would have been in the, I guess the late- well the early 90s, and so you know, before and I was young and so this before like cell phones and before email was ubiquitous. And my parents dropped me off at a hockey camp, and so even though I’m from Oklahoma, I still you know I actually grew up playing hockey. And so I got dropped off at a hockey camp in Minnesota, and then my parents were going to go on a trip, and so I wasn’t going to be able to get a hold of them where I couldn’t just call the house phone and get a hold of them. Well they dropped me off, and then later realized that neither one of them remembered to leave me any money. And so I had to find a way to kind of fill in the gaps between the provided meals and find a way to pay for my meals, and so I ended up coming with up with a scheme where I would like pre-sell pizza by the slice, and so I like take orders throughout the dorm you know, kind of highest bidder like by the slice, and then collect the money in advance, and then order the pizza, and then pay for it and then like take my cut, and then distribute the slices to the people that pre-paid. So yeah and after that, they actually- the camp made a rule that campers couldn’t do business with each other anymore. And so to me, is that a necessity but that’s maybe, that was my first time mate you know, making money I suppose but…

Jeffery:
Wow, that’s brilliant! You solved the problem, right? You were like, “I got no money. I gotta do something or I can just eat the regular two meals a day or I can go out and figure out how I can get around this.” So brilliant! Hey, it works-

Nathaniel:
It was a necessity..

Jeffery:
-and I love those little stories because I think that they really define the individual on “are they able to work around problems, are they able to drive and fix a problem that’s in front of them when they get further on in life?” And you’re able to do that and you know, lots of interviews have done, but also just in context of of entrepreneurs. They’ll tell you about a story where they were selling things to students or to people in grade school. Like “I built airplanes,” one guy built airplanes and sold them to the kids, so he didn’t have to do it. So it kind of, it’s funny, right? It’s a good little way that you move through, and make your money, and grow, right?

Nathaniel:
Well, and also looking back on it, it never occurred to me then to like try to figure out how to get a hold of my parents, or like try to get money from some other adult. I mean like my mind immediately went to I need to, you know, get money. I need to find ways to get money from my fellow campers to then you know, support what I want to get next, you know. So maybe that’s somehow instructive on my mindset.

Jeffery:
Oh, 100 percent it is. 100 percent. So now you’re in Oklahoma. You operate, you work, you run everything out of that state, what have you found and how does it work in the ecosystem for startups? Because now that you’ve kind of built and groomed through your company some things that you’ve done in the past, now you’re faced with this whole new ecosystem of being in startup world. Is the community built around startups or is this so completely new and you’re kind of being a driver in this space?

Nathaniel:
Yeah, actually the answer would have been way different ten and even five years ago. So you know, over the past 10 years and especially over the last five years, there have been developments of now we have you know accelerators, incubators, co-working spaces, university programs, angel clubs, and so there were some of that you know credit requirements, too. There was some of that before, but the acceleration and development of that has been.. there’s been more last five years than it was in the previous you know 50 years let’s say. And so our perception was, this is a great time to start an early stage venture capital fund, and so you know the pipeline’s been built, and so here we are in a position to make those early stage investments. and you know Oklahoma and then let’s say this part of the country has been getting more and more attention even before COVID but especially because of COVID, I mean almost every week I see an article in the wall street journal or elsewhere talking about how some VC fund, or famous investor, or entrepreneur is moving to the middle of the country, or moving to other you know markets outside of kind of your usual suspects because you can build a company much more affordably which is good for investors and entrepreneurs because they keep more equity. And so, that’s playing out and being accelerated with COVID as well, and we’re seeing that I mean, I almost every week I talk to an entrepreneur who has moved to Oklahoma from some major market because they saw that opportunity and you know, with remote working becoming the norm, it just made a lot of sense for them to do that.

Jeffery:
Well, it’s interesting because we’ve been chatting with different groups, cities, and in the area in Canada, and Ontario, and they’re coming up with plans to try and figure out how to keep their people engaged in living in their cities and towns because there’s not been say a mass exodus, but there’s been a few people more than normal if you will, a few percent more that are now deciding, “Hey, I’m gonna go move over here because I want more property and I don’t want to be in the city,” so with that exodus all kind of happening in the US. it’s folding inwards I guess instead of moving elsewhere out to San Fran to New York where all the major hubs are for startup land or business running. They’re spreading into the middle. Is that forcing you guys, as a city or town, to be figuring out how to expand your town and the way you’re operating it? Or is it not that drastic at this point? So you’re just kind of dropping in accelerators and incubators to kind of help facilitate this influx of new people?

Nathaniel:
Well, I- Oklahoma City and where I am especially, I think well suited for this because we have no topographical features that kind of restrict where we are. In fact Oklahoma City by area, by just square miles is one of the largest in North America, and so by population not so much. But so you know, there has actually been a lot of that over the decades, spreading out and finding the cheaper land, and developing in the far area but there’s- there had been more of a move actually towards the middle and dense upon me. And so you do see it’s been slowed down this year but because of COVID but it’s still happening which I think is a testament in and of itself where you actually see more people seeking to be in the City center, and you see more density, and there’s plenty of infidel development opportunities, and that- that’s you know, been continuing. And so I think- and actually I was looking at just the other day, our population has doubled in. I mean it’s I think in the last 20 years or so, don’t quote me on that, but it has been a significant increase in population you know, over just a short number of decades. And so it’s almost like we’re built to be growing you know. We’ve- there’s been a lot of investment in infrastructure here, quality of life, economic development, and it’s paying dividends. And we thought we’d kind of hit the peak you know, but now there’s this whole new dynamic of a recognition by the investment community, and by the business community, and frankly by even political leadership to say we need to diversify our economy beyond oil and gas. And so we need to invest in things that will attract other types of industries and we’re poised to you know, be an enabler and a beneficiary of that development.

Jeffery:
And that’s amazing! And it’s good that the Cities are thinking of this. And I do think a lot of this is coming from obviously, the web and the way that the stories are getting picked up on unicorns and all of the change that’s happening. In the startup world, everybody wants to be a startup. COVID kind of helped accelerate that again just like in 2007-8 when the financial crisis happened. There was a big push into startup world, and trying to expand that, and now there’s a lot more funding and dollars that are coming into the startup world versus 10 years ago. So I think that that’s really helping accelerate it. How much from a government standpoint, local government versus congress, how much are they pushing down to help pushing money and helping out early stage companies?

Nathaniel:
Yeah, I think most of what I see is at a statewide level. So you see states that are coming up with different incentives to promote early-stage investing and in fact, it- I think it’ll be considered in this next legislature that starts in Oklahoma, and you- I’ve seen other states do something similar recently. I think with the new administration, I did see recently that there is some idea to incentivize early stage investing with the new administration coming in. You know, we’ll see if that happens but it- the fact that it’s even being thrown about means that, it’s you know on top of somebody’s mind that’s in that administration, so.. but yeah, we do see a deliberate effort in Oklahoma and in other states in this part of the country to incentivize at the state level. But you’re also seeing like Departments of Commerce, and you’re seeing economic development agencies in different towns that are trying to find their own ways to incentivize. You know, if not through you know a tax incentive through underwriting you know, development to convert something into a space into co-working location, or to you know bring in somebody who will study that local ecosystem to say what are the sectors, where we should invest a lot of time, and try to attract that type of entrepreneur. And so even if it’s not necessarily economic, I’m just looking at other ways to leverage the political leadership, I see it happening at a some kind of city and town like government level. I see it happening a lot at the state level, and so I think that’s maybe where you see most of the innovations kind of the government, or policy innovations happening is at the state level.

Jeffery:
And is that- so does that drive a lot more like the companies or the entrepreneurs that would be coming into Oklahoma? Is that more deep tech versus product? Because now you’ve got distribution and operational issues that can come out of being just in the core which means that you’re pushing outwards, does that become more uncost effective I guess? Or it becomes a breakdown, so you’re driving in more entrepreneurs that are really looking at deep code, deep tech, where they can be anywhere and it doesn’t matter because it’s just all online based? Is that the types of companies that you’re seeing kind of filter their way Into the Oklahoma area?

Nathaniel:
Yeah, I do see some of that. I think you know, us recognizing like where we should be spending our time is really important, right? Because just saying we want to have you know innovation happen; we want to have entrepreneurs. That’s not going to be as productive as saying, where do we have infrastructure? where do we have, you know native talent and kind of institutional knowledge that-? And what sectors do we already have that are or that are emerging in the state that we can leverage? And so you know, Tulsa recently came out with a study that identified you know drones and energy, and a couple other areas as being great places to spend, well to focus on innovation, and so you know we have a strong you know, air force presence in Oklahoma, and a lot of aerospace companies, and then certainly energy and you know oil and gas, but also beyond oil and gas. But thinking more about tech, right? Not thinking so much about you know hardware, but thinking about what kind of deep tech can we deploy, what kind of AI can we deploy to you know maximize productivity, or cut costs, or to you know address environmental impacts but with application in energy? And so in some cases, yeah you may see you know, kind of you know deep tech but then applied to you know applied to agriculture, applied to areas that where you see a lot of success, or you see a lot of you know sectors that are already developed here. You know so, and then also we there’s kind of manufacturing, logistics, transportation, and so because where we are and kind of the major highways that are kind of you know.. we’re a crossroads of some major highways. There’s a lot of interest in transportation, so a lot of times that manifests as hard tech you know, and so hard tech with kind of a SAS platform, we’re seeing some of that and which makes sense. All those things make sense where you’re saying, “Hey, I see this trend happening in New York or San Francisco whatever. I see..,” but what does that mean- would that look like if we were to take some of that same skill set and apply it in Oklahoma?

Jeffery:
100 percent and I think that really defines the area eventually too, right? So then you know where you’re getting that type of AI, the type of developers, or the people that entrepreneurs that are going to come into that sector and kind of expand it. And it kind of goes on the premise, too. Around cities and towns like, once you start to define like what San Francisco is all about and where it’s- what it builds up, and New York is building up, all the towns have to be unique identifiers for themselves as well. Like what are we good at, what do we need help in? You know, we’ve got cities outside of Toronto on the GTA, where you’ve got really deep tech going on in Hamilton. They’re doing a lot of- they’ve got structure set up for Bitcoin mining, they’ve got a lot of deep tech, that’s really fit into there because like you said infrastructure costs are cheaper. They’ve got the university there which is a pretty big university. So once you start to segment that in then all of those businesses all start going there because they can see that they’re going to get resources, they’re going to get PhDs, they’re going to get AI, they’re going to get support, so then that hub just keeps building and building because that’s where that emphasis was. Whereas you go a little bit further. You get in Niagara falls and now all of a sudden, you’ve got a bigger change in there because you’ve got wine countries, so different tech that’s building and over there so different entrepreneurs. So I think you start to see the across the cities and countries that where you’re going to start emphasizing, and being in Oklahoma I guess, you’ve got to pick the companies that you feel are going to better fit in your portfolio based on what the expansion can occur from where they are to going outwards because I believe one of the things that you guys were looking at is trying to focus more on Oklahoma-based companies, is that correct?

Jeffery:
That’s right. Yeah, so we definitely, you know, any companies that are here or that want to move here for a reason, right? So we look at that go-to-market strategy and the product market fit, and we kind of ask ourselves you know, “Why us? Why Oklahoma? And how can we help give that company an unfair advantage?” because of our knowledge my partners, and I have all built companies in Oklahoma, and different sectors. So how can we leverage that to give that company unfair advantage? How does them being located here give them unfair advantage? And so, and those answers generally are going to tie into you know, there’s the fact they’re operating in one of those verticals. You know again, whether it’s software, hard tech, you know if the use case or if one of the use cases kind of the beach head, so to speak, is in a vertical that’s strong here then it would make a lot of sense for them to be located in Oklahoma for access to customers and channel partners.

Jeffery:
I love it. So while you guys are kind of building all your fun and figuring out the types of companies, gotta want to pull back to where you started with all this, and how much your past experiences are really helping you today. And I believe you spent some time in the air force?

Nathaniel:
That’s right.

Jeffery:
How much of that experience do you feel just the way it’s structured, the way it works, and then going in and building your own company, and then selling it, how much of these experiences do you find really transfer into what you guys are doing today?

Nathaniel:
Yeah, I see so much you know.. anyway, we can all be lucky if we feel like we’re being fully you know utilized, and fulfilled, and kind of bringing our experiences to our work, and I’m in a fortunate position to you know to have that because I even have some background in politics. And I feel like a lot of you know, I feel like what we’re doing is like a campaign, right? Like we have a story to tell, and we have you know stakeholders to align, and it’s a bit of a sprint to say like we’re gonna raise the fund, and then we’re gonna find people that think like we do, and bring people onto our team. And so whether that be you know investors, stakeholders, or entrepreneurs that see that vision. And yeah, I think background as a business owner, and operator, and entrepreneur you know, I’ve been funded. As a business owner, I’ve been funded with private equity as well as you know, family office, and direct institutional. So the different kind of colors of money, and the some of the similarities and differences, and how they all kind of fit in together. I think that’s been very helpful but then also just kind of seeing like how seeing from the other side of the table, and knowing what entrepreneur is going through, and having it’s the empathy but also maybe being able to be helpful and say like, “I know that when I was in those shoes, I was really thankful when somebody gave me that feedback.” And so, I think that is informing a lot of what we do. You know as far as like the air force background, I certainly have a different sleeping pattern that I maybe did and a less well-made bed than I did at those times, but certainly having being organized and having you know.. so situational leadership is something they talk about a lot especially, in kind of an officer ranks where you knowing when it’s appropriate how close to lean in on your micromanaging versus pulling back, and there’s a lot of time spent in that but also just the communication, the organization, and the expectation to perform. Those are things absolutely carries through because you know we’re all, especially when you have a distributed workforce and where you know it’s very kind of what we’re doing is very decentralized, right? You know, you have- we have investments with a number of companies and certainly we’ll have more. So there’s a lot of expectation of you know people are going to execute on their jobs, how do we communicate what those expectations are but then how do we enable them to do the best they can? Those are all kind of features of what we do. We’re not just one company that is you know very centralized, and so I think those things are informed by a lot of the experiences I’ve had.

Jeffery:
So, did you take- like taking the air force structure, the discipline, all these key elements that you go through that repetitive nature, I’m assuming that there’s a lot of that even though you may not realize it at the time, but you take that and you find that when you’re working with companies, and you see this disorganized, not moving in the direction that their plans are saying, or not validating things, do you find that that kind of comes out more? And you’re almost trying to create a structure and say, “Hey, look we need to scratch this and do this all over again. This is how you have to look at something,” because I find that even when we work with a lot of entrepreneurs at the beginning, that is not further along they find their groove. But at the beginning, it’s just this big discombobulated process of just taking everything in and trying to do whatever they can to keep moving forward, and not realizing that all of those things may actually be causing congestion, and not helping them move forward fast enough. So do you find that you guys get to do a lot more hands-on, and dive in, and help them kind of build their way up to that next investment? Or are you kind of sitting on the sidelines?

Nathaniel:
Well, I think yeah knowing like the right level of structure and then where to focus, right? So being able to have you know some of it’s just experience and others you know, when you’re in the middle of it, when you’re trying to build something, it’s very tempting to be like, “I’m going to do everything because by golly I’m going to do whatever it takes to be successful.” With any kind of your own worst enemy because if you just did the most important thing amazingly, and then everything else was like a C- like that’s probably better than doing everything at like B- level, right? And so but then, like picking what that is, and then having the discipline to stick to it, and know why you’re sticking to that, is an important feature from you know from those experiences. But you know we also can sometimes see you know analysis paralysis or like too much structure you know. And you know that happens less but there is, I think there’s definitely a value in you got to do it, right? I mean and so actually just saying in the air force that “Hope is not a plan”. You know like just saying that like, “I hope you know we’re gonna make this big structure and have this kind of beautiful like presentation, and this like great set of advisors,” and you know what like at some point you need to actually just like make the plan and execute, and just like do the next step. Build the thing. You know get that first customer and so there’s a bit of an art to that as well and then knowing where to strike that.

Jeffery:
And do you guys spend like, is there a good amount of time when you guys make an investment and maybe you can describe a little bit about how that investment works when you find a company? Like what is that next process? Is it deep dive, you’re spending time like as consultant side of things, or are you just kind of making that investment, and then coaching along as you go. Is there something further you’re diving into to really help these companies expand and get to that growth stage?

Nathaniel:
Yeah, we try to really get to know the entrepreneur which you know, Zoom. in some ways makes that easier or harder. I mean you get to visit with more of a team you know because it’s easy on a zoom call but you don’t have the face-to-face element. But we certainly do spend a lot of time trying to know the entrepreneur, and their you know motivations, and really what’s you know, what’s driving them, where are they strong, where are they weak, how self-aware they are, and that’s you know there’s a lot to that because lack of self-awareness means you’re not going to see your blind spots. Once we feel like that the you know the big rocks, the big things are there as far as the team and the idea, and the market, then there is a period of getting to know that entrepreneur. And you know we will spend some time through that before we actually move into the due diligence, and so- and we do spend a good amount of time on the technical diligence, in terms of looking at it, I mean if it’s software, can it scale? How is the architecture sufficient to be able to scale and do what they wanted to do? You know, if it’s more and we also spend time visiting with customers, potential customers, customers that passed, and finding out is it something that they love? You know we want to find- we want to invest in companies that built something that their customers just have to have. And so having that candid conversation is a really important part of a process because we can be in love with something and just think the world of the team, but if the customer response is not there, then that’s going to be a stopping point for us. Now I said that, if there is still high conviction around the team as we get to know them, we know that playing plan A is rarely going to be the thing that actually works. And so the ability of an entrepreneur to pivot to plan B, and C, and D, is actually even more important than just having the kind of beautiful plan A. and so it’s actually not necessarily a death knell for to see that the product isn’t there. In some cases we may want to be in position to say have you looked at you know applying your technology in this way or this kind of customer demographic? And I think you know that that discovery process, and seeing how that team, and how that entrepreneur reacts to that feedback, and is able to pivot is really important to us.

Jeffery:
I love it! You mentioned past clients. What I like about this is that not only you’re focusing on the clients that are using the system, you’re finding out why customers didn’t use the system. You guys might actually probably, may be able to get them to convert back and use it eventually because you’re doing that reach out but when you are having that discussion, what are you finding? What are the reasons that they’re backing away? Is it a financial thing, is it they just weren’t qualified enough, or was it they just went with the competitor? Like what do you kind of build around stats around that?

Nathaniel:
Yeah. I think sometimes, we see that it’s maybe just like not a tech stack fit you know, and so like, okay well, once we have the integration built out, that’ll solve for that and so that’s good. Other times just something where the benefit of the product is just not that great you know, like yeah it works but it’s the adoption versus the benefit. And it’s really sometimes, it’s not just a straight up like cost benefit analysis. I mean, it’s typically to think that like, well if you know, if the cost benefit analysis is a go, then it should sell. But a lot of times, it’s just the adoption hurdle because you may have managers that say like, “This is amazing! All of my associates should use this,” but if the associates that or the technicians or the people that are supposed to use it don’t like it then guess what, it’s just not going to work even if the numbers are there. And so trying to find out if there’s a disconnect, and sometimes seeing this disconnect between yeah the manager loves it but for some reason just can’t get the the people on the ground to use it, if that’s applicable. So we see that you know sometimes and then I think you know and sometimes we hear feedback about we’re just not sure about the viability of the company. You know not sure if they’re gonna you know love the idea, love the tech. Everything there checks out but then just worried about is that company gonna be able to scale up and are they gonna be around for 10 years you know. And so, and that’s actually also some feedback that we maybe are okay hearing because like well we can help solve that you know, if we can help them get funded, then we can actually help solve that issue. But if it’s an adoption issue or if it’s kind of that you know, do they love it? Is the benefit there? If that’s the issue which it’s kind of a we hear we hear those four things maybe probably evenly spread, then that’s hard to overcome.

Jeffery:
And that’s good! That like you said when they’re having, and I’ve seen this issue quite a few times where the business doesn’t want to put mission critical in the hands of a startup. So they’re worried by, “Are these guys going to be here in two years? And am I going to have to revamp everything and redo all this process to get everybody, all my associates, or my team integrated into this platform?” So it’s good that you guys are doing this because they’re actually becoming a support mechanism for that because then they see that the VC money is actually supporting the outcome of this company, so they might be more inclined to say, “Hey, you know what maybe you guys are making me feel a bit more comfortable. We could do something here.” Yeah, I love it! That’s great and you don’t hear that very often. So I think that that’s a unique piece that you guys are doing that you’re not just diving into existing customers or you’re diving into the ones that didn’t cross the line, and getting that feedback is hugely important to making the decision to invest but also a decision if this company can scale. If they’re really solving a major problem, so kudos. I think that’s your engineering background. (Laughs)

Nathaniel:
Yeah. You gotta, you know, you can’t- get just go off of survivor bias, right?

Jeffery:
Yep.

Nathaniel:
You have to find out what happened to the ones that didn’t make it.

Jeffery:
No, I like it. That’s great! So now, just to kind of shift things over, I wanted to jump into, we have some rapid fire questions. So we’ll jump into those and then there’re a couple more questions that we have from there, but we’ll jump into those if you’re ready for them.

Nathaniel:
Yeah, let’s hear it.

Jeffery:
All right. How did you get started in investing into startups?

Nathaniel:
I invested in a good friend of mine, in a about six years ago. The technology that he was developing, so it was- I just believed in him and just.. yeah, that was my first investment.

Jeffery:
Awesome! What’s your favorite part of investing?

Nathaniel:
Learning new ideas, for sure. Like just seeing all the new cool things that are out there and that’s my favorite part.

Jeffery:
Okay, how many companies do you invest in per year?

Nathaniel:
We are on a pace, they’re still very young. We’re on a pace to be about 10 per year.

Jeffery:
Perfect! It’s huge, okay. Any verticals you’d like to focus on?

Nathaniel:
Yeah, I’d say you know, energy, aerospace, ag, biotech, fintech, and sure tech, and logistics.

Jeffery:
Okay, it’s a good mix. I like that. When you guys are doing your due diligence, is there any specific requirements that you guys need to have in order to make an investment?

Nathaniel:
I always like to see a proforma. I know that’s kind of a touchy point because performers can be totally made up but I’ll put it this way, if you can’t make up a good looking proforma, well that’s a bad sign, right? (Laughs) If you can’t logic your way into a good looking proforma, then how on earth is reality ever going to live up to that?

Jeffery:
Well, and you need targets so you got to start somewhere.

Nathaniel:
Mm-hmm

Jeffery:
Okay, I like it. What’s your timeline for investments? Because you’ve talked about doing some a lot of pre-work before you make an investment which I think is brilliant and a lot of times you don’t get that option to spend time learning about a company, meeting a team. So what does that look like for you guys when you’re making an investment?

Nathaniel:
Yeah, we’ve had- we’ve pulled off a precede in a matter of weeks. If it’s again you know, pre-seed there’s..you’re really..it’s kind of yes or no on a couple of issues. You know series A is probably more like three months you know, the full bit but I’d say on average probably, about you know six to eight weeks-

Jeffery:
Okay.

Nathaniel:
-period

Jeffery:
It’s a good time. On your DD materials, are there any things that you want to make sure that you see on paperwork, or team, CEO? Is there something that stands out that you really get behind when you’re making that investment?

Nathaniel:
I think how that team or entrepreneur like came upon that solution you know. What is the story? You know what were they working on? What problem did they solve and say, “Aha! I got to quit my day job and do this,” you know that genesis story is really important to us.

Jeffery:
I like that. Yeah, what got them to put this on their plate, 100 percent. Do you look to lead rounds?

Nathaniel:
We do. It’s not a must criteria for us but you know, we do expect and will be soon leading or co-leading some rounds.

Jeffery:
Okay. Do you have any preferred terms? Pref shares, common shares, safes?

Nathaniel:
We do safe sand convertibles in that you know, pre-seed and seed level, and you know to me to a typical feature is kind of your y combinator like cooley go-type terms. But conversion I think you know, conversion caps are important for us. That’s just kind of that I mean, you know frankly, it’s this way of getting credit you know but protecting against dilution on that next round. But then we always look for on a price round look for a board seat or board observer rights, and you know and pro rata rights, or another kind of you know must-have.

Jeffery:
Okay, and do you do follow-on investments? Percentage?

Nathaniel:
Yeah, in fact our default is probably a follow-on. You actually expect to invest in, you know, dozens of companies at the precede stage and then follow on as they hit certain milestones. So we’ll set aside 40 to 50 percent of the fund for follow-on.

Jeffery:
Awesome. It’s a lot higher than most, so that’s good. I do agree that you need that especially, when a pandemic comes around, you can need some cash to dip in there. Outside that are there any other ways that you guys look to help startups? Outside of just the cash and the deep dives at the beginning, are there other facets that you like to help with those companies as they grow and move forward?

Nathaniel:
Well, we always like to connect them to customers and so our 40 plus investors so far are almost all business owners throughout Oklahoma and the region, which is part of our secret sauce because we have like built-in customers and built-in you know, referrals right? And so, in fact I’d say out of the 45 investors, there’s probably 25 sectors you know represented. You know certainly 15 or more, and a lot of times we’re actually connecting with the customer before we invest. You know it’s kind of a way to- for one to see how they do pitching a customer, and how that customer reacts to it, but also to prove to ourselves that we can be helpful. So if we can prove ourselves that we can help that company, then that’s that unfair advantage you know talked about. So that’s certainly a way, channel partners same way, and then just you know my partner, David Woods, he has a career in strategic and executive coaching, and so he’ll actually work you know, as we get further along with these companies, we’ll work with them to develop that skill set and that growth.

Jeffery:
Very cool. Is there a company or two that you want to share or highlight that you think you really see these people doing a good job?

Nathaniel:
Yeah, I think.. well, I just speak you know so recently, I think we shared on our website and our social media a company called Mito Materials. They- so the- Haley Keith, the CEO, she was featured in Forbes 30 under 30 last week. They also you know, were were recognized as a top startup and have- they have a graphene application you know additive manufacturing. It’s been you know, it’s been piloting very well and their growth has been with you know, their customer pipeline is pretty outstanding, and their technology is just something that it’s been kind of the holy grail trying to figure out how to use graphene in a practical application in manufacturing, and they figured it out. And so loved seeing what they’re doing and then a company called Social Wyze that we invested in. We recently featured because Mark Cuban was also an investor, lead investor in that, and they are finishing a pilot in Dallas. It’s a job tech and fintech platform, so you know connects governments and nonprofits, and private sector with you know underserved employees, and you know for gig work, and you know blue collar work, and others. And so they’ve gotten some well-deserved attention with their very novel application. And so you know, tremendous opportunity for them and as well as social impact. So love seeing what they’re doing, too.

Jeffery:
Awesome! Those do sound like pretty cool companies, how do you spell the first one? Just so that I have this url down.

Nathaniel:
Yeah, so Mito Materials at m-i-t-o, and then social wyze actually has a unique spelling, too. So social, spell the usual way, but wyze is w-y-z-e.

Jeffery:
All right. We’ll take a look at those. Okay, so the- thank you for that, very informative! So the next question I have is that, throughout the time that you’ve been working with startups, you’ve been investing in them, you were a startup, is there a story like we look for this heartfelt story of something that you couldn’t believe it, you mentioned with mito that they came up with this great way to work and build out their product female founder. Is there a story like just beyond all odds they just were able to crush it or they ended up having to fail because it couldn’t get around the corner? Any story that just comes to mind that you’re thinking like, “Man, this would be a good one to share that people can learn from.”

Nathaniel:
Yeah. Maybe, so you know, Cortado Ventures is so young that there’s- we don’t have those stories you know yet but I can you know, tell one from one of my angel investments. That actually the first one I did, with my good friend and so this is a company that the technology it’s a chemical that can be used in agriculture or in energy, and specifically in mining or also a medical application. So as a disinfectant, or even as a kind of antibiotic. So it’s one of these products that’s been- it every test they do you know with the FDA and USDA, it’s just off the chart. You know, it tests very well. It works. The point is like the product absolutely works but trying to get to a point to commercialization like that journey mean that to me looking back at that I made that investment because it’s like, “I know this guy has a big road ahead of him and who knows really early, who knows it’s going to play out but I believe in him because he’s going to just not give up and he’s going to find a way to make it work,” well that that’s absolutely played out now. And you know, the key pieces that fell in actually, was you know bringing in you know a commercial minded person into the board level, and that was actually a bit of a turning point, and so you know that perhaps there’s some lesson in there, and where the lesson is you know that tenacity, and creativity, and ability to keep going. Especially, when you know like the thing works, but trying to find that traction, and like don’t give up but also you know having those right skill sets and having somebody who has successfully commercialized things. Especially, if they’ve done that and if a couple different unrelated areas you know, that person is absolutely just invaluable to have. I mean as an investor, as you know for board leadership at a senior position, and so but seeing how far they’ve come, and then just the last year, done more in the last year than I think the previous you know six or seven years combined. So you know that’s- I think that’s- it’s a tough road but if you can take some of those lessons at as an investor but also as the entrepreneur, that I think that pays dividends.

Jeffery:
So it’s the resilience and being able to stick behind the product to build, and then look at areas of weakness, and find where those strengths can be improved on, right? Finding that product person or the commercialization person made a big difference. So yeah a ton of learning in that and you know, what it doesn’t happen overnight, so if it took you six years to get there. No, Netflix wasn’t a masterful Netflix in one week. They took over a decade almost two decades to become the size of Netflix, so you know, you may not start off the doing the same thing on day one that you’re doing 10 years from now, but as long as you’ve got a way to pivot and understand your environment, you have the opportunity to grow, right?

Nathaniel:
Absolutely.

Jeffery:
I love it! All right now, we’re going to just turn a little bit to the personal side. So your favorite sports team?

Nathaniel:
Well, if I can go beyond pro that I just say you know the University of Oklahoma Sooners but pearl, I’d say Oklahoma City Thunder in NBA. So very proud of our NBA team.

Jeffery:
Yeah, they’re a good team. OKC is pretty good. I’m- I think I’m a partial fan just because they’ve always had a very good strong team. They weren’t the raptors last year but they were- they really bring so much value to the game compared to Lakers and all these other teams. I just always enjoyed the style that OKC and they went all the way they played a really strong game. So big fan, I actually think they should have went all the way to the finals but..

Nathaniel:
Yeah, we got I mean the players that have come out of our franchise are pretty incredible, and it might be a bit of a rebuilding, but you know got to have a part of that long game, right? I mean you can maybe take some lessons from entrepreneurship and apply it to being a you know, a fan.

Jeffery:
Yep, completely agree. Okay, so does that mean you’re a raptors fan too or no? No? Are you sure? (Laughs) All right, so favorite movie and what character would you play in that movie?

Nathaniel:
Actually like Interstellar with Matthew McConaughey

Jeffery:
Yep

Nathaniel:
And I don’t think I would ever say this about any other Matthew McConaughey Movie but I would play him I mean you know because-

Jeffery:
Yep.

Nathaniel:
-he’s the main guy and he gets to do cool stuff, and travel through space sometime, and but yeah there’s probably no other Matthew McConaughey movie where I’d be like, “I want to be that guy.” He’s a cool guy, don’t get me wrong. But it’s not the character. Yeah, Interstellar. I love.

Jeffery:
Yeah, that actually was a really good movie. I have to- there’s like a whole list now movies I got to go back and watch because of all the recommendations but I did like Interstellar and I remember it at the very end was the- when there were the rooms that were all caving in, and dividing, and he had to make choices. that was the best part of the movie-

Nathaniel:
Yeah.

Jeffery:
-because the big puzzle. And I swear I was probably yelling at the screen, “No! Go this way,” and whatever but yeah it was pretty intense. So a great movie, great movie.

Nathaniel:
Love the soundtrack, yeah.

Jeffery:
Yeah. Well, Nathaniel, I think that we’ve topped it off. I think you brought us through a great journey, through all the things that you’ve kind of done, and where you got to today we got a little bit personal on finding out your favorite movie, and well we- I kind of guessed that that was your favorite sports team but still glad to know that that was it, and but I think at the end of it all, I think we learned lots. As always I take lots of notes, so I’m a fan, learned lots here, and very exciting what you guys are doing in Oklahoma. I think that I love the fact that you’ve got a whole group of Oklahoma entrepreneurs investing in the fund, and you guys are building out and investing in localized talent, and bringing in some great companies that can kind of spread across the United States and globally. So kudos to you guys for all the great things you’ve been doing, and we hope to get you out to some of our events so you guys can check out some of the global companies that we’re showcasing, maybe even get you on a panel. But outside that again, thank you very much for all of this. And the last thing that we like to do is we like to leave you the last word. So anything you want to say to investors or to entrepreneurs, this show is yours so take it away.

Nathaniel:
Yeah, I think now is an exciting time to, I mean to be investing in startups, right? I mean we’re seeing technological disruption and adoption, and the rate of startups reach you know, record levels. So I- you know, this is a great time, an exciting time to be an investor, and see all the things that are happening so and really appreciate the entrepreneurs that stick their neck out there and I know, you know, they hear a lot of No’s but just know that every no, it means you’re one step closer to a yes. So really appreciate everybody that’s part of that magic.

Jeffery:
Love it. You’re right, there was one, in one guy that we worked with and invested in he said that he counted he had 400 no’s before he got a yes.

Nathaniel:
Oh man.

Jeffery:
And they sold their company for I think, it was a billion dollars years later.

Nathaniel:
Now, 400 people that are you know kicking themselves, so.. (Laughs)

Jeffery:
Yeah, it takes time but if you got the right mindset in the drive, you’re gonna make it there. So but thank you very much again for your time. It was brilliant! We’ll let you know when everything’s done and ready. We’ll ship it out, and we’ll help promote it, and push it across the lines, and we’ll keep you posted in the probably the upcoming month.

Nathaniel:
Great! Well, thank you JP! I really enjoyed it.

Jeffery:
Oh, that was brilliant! So Nathaniel from Oklahoma City. Man, I love the fact that he’s got this great background in the air force and how he brought that into the companies that he’s built and what he sold, engineering side, the five brothers. Very cool background and learned from that as well, and then just all the great things that they’re doing in Oklahoma. OKC, by working and focusing on the localized talent and helping them grow, and then utilizing all of the investors and entrepreneurs to keep growing that fun, and growing in and making that investment. So fantastic and love the fact that Interstellar is one of his favorite movies. Great flick! So anyways, thanks a lot!

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