A key early stage investor has rebranded and launched a second fund to better deploy institutional capital to Oregon startups.
Oregon Angel Fund has changed its name to the Oregon Venture Fund to better reflect the work it does, according to the group’s five partners. It has also launched Oregon Venture Fund XII, a five-year, $30 million to $50 million institutional fund.
What sets Fund XII apart from previous funds is its five-year lifespan. Historically, OAF has raised an annual fund. The entire fund is invested and any un-used money was returned to backers. With a five-year fund, institutional investors will be able to commit capital once for a five-year timeframe, instead of investing every single year.
“(It) will enable us to work with more Oregon institutions and organizations who are stakeholders in our regional economy and share our commitment to boosting innovation and creating local jobs and wealth,” said OAF founder Eric Rosenfeld.
Those institutional investors include the state of Oregon, Oregon Community Foundation, Meyer Memorial Trust, Northwest Health Foundation and Willamette University.
The newly branded Oregon Venture Fund will continue to raise and invest an annual fund for its 180 individual investors. Last year, the fund invested $7 million into seven companies. Its individual investors put in another $6.8 million into companies, bringing the total invested by the fund and its angels in 2017 to $14 million.
This year, OVF expects to invest another $16 million. By 2020, the group wants the fund and its investors to pump $20 million into companies.
The Oregon Angel Fund grew out of the 2007 Angel Oregon event hosted by the Oregon Entrepreneurs Network. That first fund raised $900,000 from 36 investors. Since then, the fund has invested a total of $48 million in 56 startups in Oregon and Southwest Washington. Its individual angels have invested another $26 million, bringing the network’s total impact to $74 million, Rosenfeld said. Notable successes include Elemental Technologies, acquired by Amazon and now known as AWS Elemental; Giftango, acquired by InComm and now InComm Digital; and Meridian, acquired by Aruba Networks and then HP Enterprises.
Rosenfeld said the fund started as an experiment, one he never expected would morph into a full venture fund.
“It was just a pilot project, an experiment, to see what it would be like to collaborate with pooled capital and just to learn from doing it,” he said. “As we got going and started doing it, we learned what works and what doesn’t and how to better support entrepreneurs and support our investors.”
Investors like OVF are increasingly important for Oregon entrepreneurs because they can help a young company scale to the point where larger, often out-of-state, investors become interested. Access to capital is often cited as the biggest barrier for Oregon companies. Over the years, groups including OVF, the Portland Seed Fund, Seven Peaks Ventures, Rogue Venture Partners, TiE Oregon Angels and Elevate Capital have launched to fill this gap in Oregon-based investment funds.
Even so, Oregon funds are still small, typically in the $20 million to $30 million range. Similarly focused funds in Seattle and Silicon Valley, by comparison, often raise hundreds of millions for a single fund.
The beauty of Oregon-based funds is that when a portfolio company succeeds, the return delivered to investors is often poured right back into the regional tech ecosystem.
“Our new institutional fund will lever the work we’re already doing and grow our impact,” Rosenfeld said. “We want to show the world how a state can, and should, invest in its own citizens.”
Last year, venture investors backed 99 Oregon companies to the tune of $348 million, according to data from Seattle research firm PitchBook and the National Venture Capital Association. Based on OVF data, however, less than 5 percent of that came from Oregon-based funds.
“I’d love for us to be 10 percent or more of the total, that way more of the wealth being created by startups will accrue to Oregon investors,” said OVF Partner Julianne Brands. “We’ll be able to keep more of the gains in-state.”
In addition to Brands and Rosenfeld, the OVF team consists of: Scott Sandler, Lynn Fletcher, Jon Maroney, and Drew Smith, who is the investor-in-residence. The firm also partners with service providers Geffen Mesher, Tonkon Torp, Slalom, Perkins Coie, Stoel Rives, CBRE and AKQA all of whom work with portfolio companies.
In keeping with the theme of Oregonians investing in Oregonians, OVF worked with the Portland office of design firm AKQA to run a contest with local design students to design the group’s new logo and marketing materials. Ten teams of two students apiece from Pacific Northwest College of Art and Portland State University participated. The duo of Anya Gearhart and Lauren Klinkhammer, seniors at PSU, designed the winning logo.
56 startups funded
2,600 workers employed by portfolio companies
50 to 60 new entrepreneur-millionaires created
$1.4B total portfolio valuation
45 venture capital or private equity firms investing alongside OVF