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After 25 years, the state’s first institutional advisory and capital management firm reached a $100 million milestone in small business investments.
You are viewing: Millions of dollars poured into Oklahoma investments, more to come
Since emerging from the Oklahoma Center for the Advancement of Science and Technology in 1999, state-funded nonprofit i2E and its for-profit subsidiary Plains Ventures have helped hundreds of entrepreneurs and startups get a footing and break into the market.
“We kind of proved the market,” said i2E President Rex Smitherman. “We proved that you can make good investments, and there are good ideas and good technologies coming out of Oklahoma.”
The most notable company i2E and Plains Ventures helped fund was the software technology company Alkami, which valued $3.1 billion at its initial public offering in 2019.
“There were lots and lots of success stories along the way, but that was the first one that was of that magnitude,” said Justin Wilson, Plains Ventures president and managing director. “Those are the ones that really raise investor confidence.”
The billion-dollar software company moved to Texas after Austin-based investors bought the company.
“It was a great story, but it’s also a good lesson,” Smitherman said. “It finally proved our point to everyone that we would talk to back then [that] there’s not enough growth capital in Oklahoma. We’ve got to get more growth capital, so we don’t lose companies like Alkami to Texas.”
Return on investment seemed unlikely in the middle American region.
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“This wasn’t an implied thought, it was an explicit thought in coastal capital clusters,” Wilson said. “In venture capital, this kind of risk capital can only be sustainable in traditional [markets].”
The nonprofit pushed the company forward. And, as the company became its own, it offered a more diverse portfolio to potential investors. In 2007, the state awarded i2E with a contract to manage a seed fund worth $5 million a year, marking a turning point for the company.
“For the first decade or so, it wasn’t about return on investment,” Wilson said. “It was waking up every day and saying, ‘The innovative potential is here. The innovative activity is here. This is real, and what are the things we can do to serve these entrepreneurs?’ And, after a while, they realized what they needed was money.”
Around 2017, the market boomed as Oklahoma began catching up to national trends, according to Smitherman.
“These things were happening on the coast,” Smitherman said. “They were happening in Chicago. They were happening in Florida, and of course all along California. It just took that long for it to come to the middle of the country.”
Another big factor came from federal funding in 2020, mostly associated with the American Rescue Plan Act. Smitherman said the influx of cash helped the nonprofit grow, leading it to reach its multimillion dollar worth today. Oklahoma followed.
“The state then hopped on the bandwagon to grow the ecosystem and the support structure for entrepreneurs,” said Smitherman.
Most startups and entrepreneurs working with i2E and Plains Ventures have been in life sciences and health care solutions, producing drugs and other biosciences new to the market. The company has invested approximately $42 million into 230 companies in those fields.
The partnership also led to high-profile landmark acquisitions. Some of those include the $665 million purchase of Selexys Pharmaceuticals by Novartis in October 2016 and the $137.5 million acquisition of Novazyme Pharmaceuticals by Genzyme Corp. in 2001. Cox Automobile Mobility acquired Spiers New Technologies for an undisclosed amount in 2021.
One of i2E’s major clients, Crescendo Biologics, was acquired by Myriad for $270 million in 2014. However, the pharmaceutical company found itself facing a lawsuit from the United States after investigations found it had engaged in a kickback scheme, a form of medical fraud where a party pays a compensation for preferential treatment or another type of improper service received.
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Despite this, i2E has made over 450 investments of $50,000 to $120,000 to around 250 companies, mostly in Oklahoma and Tulsa over the last quarter of a century. It plans to continue expanding next year, exploring new opportunities in growing sectors, including artificial intelligence and aerospace.
Wilson looks for companies that have some technological advancement unseen in the market.
“We’re about returns,” said Wilson. “We’re an investor, so we choose based on the profiles of companies and incredible founders who have potential to achieve incredible results.”
Smitherman added that out of the 300 applications the company receives, roughly 50 to 60 are chosen for investments. He said he looks out for key factors: scalable, technology-driven, marketable. Once those conditions are placed, many companies are filtered out.
“We’re really a niche organization,” Smitherman said. “We’re looking for a new idea — a technology, and the technology has to be able to be protected by, for example, a patent.”
Marketbeat data found investor sentiment in Oklahoma was pessimistic looking into 2025. Four out of 10 investors felt optimistic about next year’s prospects, falling short of the six out of 10 national average.
Smitherman said he doesn’t expect to see a decrease in good ideas and entrepreneurs or startups that can deliver results. Though, he added he expects the market to become more complex as a large trove of resources become available to startups and entrepreneurs in the future.
“The challenge for us, on the nonprofit side, is navigating the ecosystem,” he said.
Wilson expressed optimism for investments next year, expecting 2025 to beat investment gains made in the last few years.
“Good ideas still happen,” he said. “As cost of capital and sentiment fluctuate, they may be more pressure to innovate in order to be vibrant and exist, and they might actually spur innovative potential for our investors.”
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