Oklahoma Seed Capital Fund: Frequently Asked Questions
An innovative public-private partnership, OSCF operates under the Economic Development Act of 1987 and is managed by a separate subsidiary of i2E. The Oklahoma Development Finance Authority and the Oklahoma Capital Investment Board are co-investors.
What Industry Sectors Are Eligible?
Oklahoma advanced technology companies in the seed or start-up stage that are engaged in producing an innovative product or service with strong growth potential are eligible. Advanced technology is defined as any state of the art, proprietary product, process, material, design, and/or know-how.
OSCF expects to invest in firms in the following Industries:
- Advanced materials
- Communications technologies
- Electronics and related fields
- Information technologies
- Medical devices and instruments
Firms not eligible for seed funding by the OSCF include:
- Banking or lending
- Development, management, and investment companies
- Farming and ranching
- Oil and gas exploration
- Production franchisees
- Public Administration
- Real estate
- Technology or non-technology firms that do not have a proprietary product or service
- Wholesale and retail
What is the Criteria for Investment?
OSCF is primarily focused entrepreneurial, advanced technology companies with strong management teams, well-protected IP and break-through solutions that serve large, well-understood markets. Companies will meet the following criteria:
- 50 percent of employees and/or assets resident in Oklahoma
- Seed or start-up stage
- Innovative products and services
- Scalable solution that satisfies large markets
- Solid financial position with no significant outside debt or other negative conditions
- Entrepreneur and other founders are contractually obligated to appropriate financial and/or time commitments
Companies must demonstrate that they are potentially attractive to private co-investors. Economic development factors such as creating jobs with higher than average salaries that stay in Oklahoma are also important.
Prospective portfolio companies are encouraged, though not required, to become clients of the i2E business services and coaching functions.
Is Co-Investment Required?
Co-investment by one or more outside investors will normally be required.
What Are The Deal Terms?
Investments of from $250,000 to $700,000 in rounds of up to $1 million will take the form of convertible debt or convertible preferred stock. The fund will syndicate with other capital sources as deemed desirable and appropriate. The fund anticipates investing in up to 10 deals per year.
What Is The Application And Due Diligence Process ?
While there is no set time for the completion of this process or any way to predict how long due diligence will take for any particular deal, we recognize that ideas are perishable, and our goal is to be practical, thorough and as timely as possible
1. Registration and Application
The entrepreneur completes the Business Plan Summary and submits an investor PowerPoint presentation. If the opportunity meets OSCF criteria, the entrepreneur will be invited to attend an orientation session.
2. Deal Orientation
A small team of i2E staff will offer candid advice about the opportunity, brief the entrepreneur fully on the OSCF process, and provide the details of the initial due diligence request. i2E will provide same day response relative to the applicant moving forward.
3. Deal Assessment
i2E staff analyzes five areas of business risk: product, market, business, finance, execution. The business risk assessment will provide the initial potential of the investment opportunity. Ultimately this tool identifies the action items or milestones that should be addressed by the entrepreneur in the Formal Review and Due Diligence process.
4. Formal Review
The entrepreneur makes a formal presentation to the i2E executive team to generate enough interest to advance to term sheet and then due diligence.
5. Venture Mentors Assessment
i2E solicits feedback from VC mentors on deals that appear likely to require VC investment eventually.
6. Term Sheet
The deal structure is established and presented to the entrepreneur. Once investment terms are agreed to, the term sheet is presented to OCAST for approval and applicability to state statute.
This step begins after successful formal review and term sheet acceptance and ends with the i2E Investment Committee Presentation.
8. i2E Investment Committee Presentation
Entrepreneur presents final business plan and due diligence reports for funding approval.
Close on equity placement.