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 ABS’s 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.
“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 a 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.”
“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
“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 were not just sticking to one sector. The other task! 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 through the state have not applied for their Employment Retention Credits (ERC). If they had employees in 2020 and 2021, they are entitled to 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:
The First Investment
Kevin O’Leary and Wonder Fund North Dakota made its first investment in LandTrust, an online land-sharing marketplace based out of Bozeman, MT, that connects landowners with outdoor enthusiasts.
“When you are doing a venture investment, particularly a series A investment, I ask myself, ‘What moat does the business have around it? What protection does it have? If it’s a great idea, what do they have in equity that others are going to have a hard time duplicating?’ That’s really important,” O’Leary said. “What I found with LandTrust and their business plan was all of the previous work they’d done to arrange access to these hundreds of thousands of acres. What took me over the top was when I found out [that] the Wilks family out of Texas, who have millions of acres in Texas, were willing to put in hundreds of thousands of acres and become my partner in the deal. That sealed it for me because what really makes that model work—I don’t care if you are a hunter, a fisher, or if you are hiking and just like the outdoors—we got it for you. We’ve got anything you could possibly want because we have such a diversity of land. So now the job of the company is to acquire customers and that’s where I can help—obviously, we have a massive social media following. That deal checked the box on everything I like about new startups and they have a fantastic management team who really understand this business. One of the things I love about it is that it’s part of the share economy. It’s one of those deals where I looked at it and thought, ‘Why didn’t I think of this?’ I love it. I think it’s great.”
If you asked LandTrust Founder and CEO Nic De Castro as a child what he wanted to be when he grew up, he says he would have told you that he wanted to be a professional hunter or fisherman because that’s what he loved to do growing up in the Laguna Beach area. He hunted, fished, surfed, and spear-fished before heading out east to attend Boston University, where he barely graduated.
“I graduated with basically a 2.3 GPA,” De Castro said. “I didn’t like school.”
But, a degree is a degree and De Castro found himself on the path to LandTrust quickly after graduating, grooming himself by taking on sales and partnership roles with technology startups in New York City. However, he didn’t know that those jobs were preparing him to one day found his own tech startup.
“I did a lot of traveling, I did a million miles by the time I was about 28,” De Castro said. “I was just traveling around talking to big brands and working with big brands, selling digital advertising and marketing technologies. Which provided a great background for learning how to acquire customers online. That was very foundational for me. I moved up to Montana from Colorado at the end of 2016.”
De Castro eventually moved from the Big Apple to Colorado and then on to Montana, taking on the same kinds of technology startup roles all along the way. “Quickly after moving to Bozeman, I was confronted with the idea for LandTrust,” De Castro said. “I’m certainly not the first person to come up with the idea. It’s not my idea, it’s an idea. There was just no easy way to get onto some of those beautiful private lands that are here in Montana. The only way to do that would’ve been to go knock on a stranger’s door. Even as a sales guy, I didn’t enjoy doing that and, after speaking with thousands of farmers and ranchers over the past 3 years, most of them don’t enjoy or have the time for it either.”
De Castro didn’t move on with the idea right away. Instead, he continued to toy with it and think it through.
“Thankfully, I didn’t do it in 2017,” De Castro said. “Timing is everything for startups and that wasn’t the right time.”
But in November of 2018, the time was right for De Castro and he began to build out his deck and started pitching to investors.
“The first investors came in June of 2019 and I quit a well-paying consulting job,” De Castro said. “My wife and I had our first child about a month later on August 5. I didn’t have health insurance, no salary, and my wife wasn’t working, so it was a big risk. We launched the website on October 2, 2019. It’s very vulnerable launching and it’s very scary frankly. I think it took two days for the first booking request to come through. Those two days were really nerve-racking, but it wasn’t a big question of if there was a need for this because some version of this has been happening forever. People have always been knocking on doors and paying fees for access to private land to hunt. They’ve called them trespass fees, historically. It was more of a question of if people will do this online in this manner and if they will they do it with us.
Did You Know?
The state of North Dakota has the fourth most paid hunting license holders per capita in the country.
“COVID shook up a lot of things and made a lot of things possible that were hard to imagine before. Because of COVID, we now are able to do Zoom calls with farmers and ranchers. That would have been pretty hard to imagine happening beforehand. Since that time, LandTrust has put over 1 million acres on the platform.
“The cool thing is that almost all of our one million acres are from multigeneration farm and ranch families. We love that we are able to connect them to a new source of profitable income for their operations because farming and ranching are pretty low-margin businesses. And there is no sustainability without profitability. If the family farm or ranch cannot be profitable, it will be sold and will likely be developed, those are just facts. We’re really a rural economic development company. We bring new money to these rural landowners and we bring new money to their rural communities through tourism.”
Some highlights and features from the LandTrust website
De Castro and LandTrust, which previously had no customers in the state of North Dakota, first became aware of the North Dakota Development Fund in 2022 through their first Fargobased investor, Erik Barner. Barner encouraged the young entrepreneur to explore some of the programs the state had in the works.
“I went out to Fargo about a year ago and met a lot of really great people. Hannah Lange at the Development Fund has been great to work with. Josh Teigen has been great to work with. The Fargo startup scene is really amazing. The people there like Jenny Sheets are pretty awesome. There’s great stuff happening in Fargo from a startup perspective,” De Castro said.
“The Bank of North Dakota and the North Dakota Development Fund came together to offer us a really great debt package to incentivize us to bring business to North Dakota and we decided to do that.
“North Dakota has phenomenal waterfowl habitat that I think is a really good opportunity not just for hunting, but for bird watching. There are a lot of people that love looking at birds, not over the barrel of a gun,” De Castro said.
De Castro received more support from the state after and introduction to Paul Palandijan, the CEO of O’Leary Ventures. De Castro made a pitch to Palandijan, O’Leary, and the rest of the team, securing a $1.25 million investment in the process, contingent on establishing a base in Fargo which will be happening soon.
This article is also featured in the most recent issue of our sister publication Bis-Man INC!, the Bismarck-Mandan version of Fargo INC!