Photo by J. Alan Paul Photography
A Look at Kevin O’Leary’s Wonder Fund North Dakota
Kevin O’Leary, one of America’s most well-known businessmen, is looking to make a big-time impact in North Dakota through Wonder Fund North Dakota, a North Dakota Development Fund direct investment program that will use federal funds allocated through a State Small Business Credit Initiative (SSBCI) grant.
In New Waters
A star on ABC’ Shark Tank, one of the most popular reality shows on television, Kevin O’Leary is in charge of investing $45 million for the state of North Dakota.
Why did O’Leary choose ND and why did ND choose O’Leary?
The man known as Mr. Wonderful maintains he wouldn’t have taken the opportunity if he didn’t see a chance to succeed.
“My first connection with North Dakota came almost 10 years ago with my investment in PRx Performance, which has been one of the most successful deals in Shark Tank history,” O’Leary said. “That really opened me up to the possibilities of what we can do in Fargo, Bismarck, and everywhere else in North Dakota. It’s really about policy. I would never do a fund like this in New York, New Jersey, Massachusetts, or California. Those states are uninvestable and I wouldn’t take the risk of trying to attract other capital to places that are uninvestable. I’m not having a hard time bringing capital in with me into North Dakota. Who deserves the credit for that? That’s Governor Burgum, the senators, and the people themselves who are voting for policy that’s very pro-business—that’s the bottom line. I couldn’t do this if I couldn’t attract more capital. North Dakota is very competitive, particularly now when you could headquarter in North Dakota and hire people from all over the world. Because of the pandemic, we have all of this technology where 30-40% of our staff doesn’t work in the office anymore. This is a golden period for North Dakota, it really is. It’s going to come out swinging as a competitive state. It’s no longer just Texas or Florida anymore.”
If it sounds like O’Leary is excited about what our state has to offer, it’s because he is. And he’s not just pumping our tires, he’s also letting the whole world know—something North Dakota Department of Commerce Commissioner Josh Teigen sees as an added benefit of choosing O’Leary.
“This is a golden period for North Dakota, it really is. It’s going to come out swinging as a competitive state.”-Kevin O’Leary
“One of the biggest reasons we chose the application of the O’Leary Ventures is because we believe the biggest need in the state is early-stage capital,” Teigen said. “Kevin has a ton of experience underwriting early-stage venture risk. Most venture companies, especially in our area, like to do later-stage deals where the risk profile is reduced. One of the intangible benefits of working with O’Leary, that we didn’t really realize that we were getting when we went down this path, is that there’s a news clip just about every other day where Kevin O’Leary is on a national news outlet talking about how business friendly North Dakota is. In my mind, that’s worth a lot more than an asset management fee. I believe, in North Dakota, we’re not very good at telling our story. We’re almost humble to a fault. And so to have someone from the outside that can look at us and say, ‘there’s world-class talent, world-class companies, and therefore a need for world-class capital allocation in a state like North Dakota,’ there’s tremendous value to that.”
“I am traveling the world talking to people about North Dakota— there’s plenty of capital that needs to be put to work on a long-term basis that knows nothing about the policy of North Dakota,” O’Leary said. “My job is to be an ambassador of that policy and I do it willfully because the policy is stable, the government is supportive of businesses, and taxes are competitive. Those are the things you want if you are putting money to work for 7 to 11 years.”
Looking to Receive an Investment from Wonder Fund North Dakota?
Head to olearyventures.com, click on the “North Dakota Mandate” tab, and upload your pitch deck.
“We want to see everything possible, “O’Leary said. “Deal flow is very important. We have money to put to work and we want to put it to work.”
Kevin O’Leary’s Do’s for Uploading Your Pitch Deck
“I want to understand what the opportunity is. I want to understand who the managers are and I want to understand what the numbers are. I like to see the problem you are trying to solve, why you are the right team to solve the problem, and what your business plan is. That’s all you have to send me are those three things. Now, you should be able to do it in 12 pages. You don’t need a deck bigger than that-you are talking too much if it is bigger than that. I want to see a concise strategy and then we will go to work on due diligence and find out what we can do together.”
Kevin O’Leary’s Warning for Uploading Your Pitch Deck
“Don’t lie about your numbers. Don’t ever do that. If you know you have bad numbers, tell me. If you have good numbers, be proud of them. I’m a big boy, I can take the heat in bad times. I’ve been there before. I’m not interested in hearing what’s going well, I want to know what’s not working—that’s where I can help, that’s the whole point. I tell all my entrepreneurs that. Don’t just flower me with good news. I want to know what we can do better.”
A Q&A with Kevin O’Leary
What is the overall strategy of the wonder fund? Are there any particular sectors you are trying to get into?
No, I’m multisector. But we will be deploying most of this cash in North Dakota. We like tech. We like ag. We like agtech. We like land, obviously. We love energy, particularly anything that’s sequestering carbon. So, we are looking to those opportunities first but we’re not just sticking to one sector. The other task I have, and I think the commissioner and governor know this, is not just to put this fund to work, it’s to attract 10x, 20x, 30x more capital to these companies because you have to make the assumption when you make the initial investment, that you’re going to have to make many more investments into the company.
What is the level of co-planning that happens between you and the state? Is there any or do you have full autonomy?
No, it’s a cooperation with the governor and the commissioner on an ongoing basis. In fact, we’re taking this to a different level. Because we feel a responsibility to the taxpayer, because this is treasury money, we are building a totally transparent architecture that lets the governor’s office or the commissioner himself or anybody that’s given access to it, a mark to market on every deal every day. So, as the portfolio sits there and things change, good and bad in the market, they can see what we’ve invested in, when we invested in it, what the last round was done at, what other investments were made, how much debt or cash flow the company has brought on, and what the company has said in the last quarter. This is a new form of transparent investing. As a fiduciary, feel the best thing to do is to shine a light on everything. Not everything we invest in is going to be a home run, that’s the nature of venture investing, but I’d rather have a totally open book so we don’t make moves without talking to our counterparts in government. We don’t make decisions unilaterally-that’s just not how it works. We want to hear their opinions on things and we kind of do it on a collective basis. I feel the obligation that! work for the people of North Dakota and m proud to do it and I want to be successful and I want to make sure they know what we are doing on the O’Leary Ventures team- that’s the right way to do it. We are going to earn our stars here. We’re going to go to work and prove that we can do a good job and we’re going to keep doing it.
One of the most successful companies to receive investment on Shark Tank, Fargo’s PRx performance, which received an $80,000 investment for 20% equity in the company from Kevin O’Leary, was featured as the cover story of our April 2016 issue.
Did you ever see this level of success coming from PRx?
No. That’s just the work ethic of North Dakota, that’s what I say. They wanted to be successful and nothing was going to get in their way. They were just as competitive as all get out. I’ve never seen anything like it. We shot an update years later in February- we went ice fishing together and we had a fantastic time. They really nailed it and obviously, they found a niche in the market that they were able to protect and they worked really hard on manufacturing and logistics. It’s really a great company. But I hope I find 10 more like that.
Is there anything else you want to say to our readers?
One last thing that you should print that I’m very concerned about. I’ve learned that many, many companies in Fargo, Bismarck, and all throughout the state have not applied for their Employment Retention Credits (ERC). If they had employees in 2020 and 2021, they are entitled up to $26,000 per employee. I’ve done that with all of my Shark Tank companies. We’ve gotten checks back between $300,000 and $I.I million. There are only three months left in the program. I’ve set up a call program, go to wondertrust.com to find out if you are eligible, and if you are, we’ll do that application for you.
North Dakota Wonder Fund:
For help with your ERC from Kevin O’Leary: