Falls Angel Fund Makes Final Investment

Hey guys, Matt Paulson here. This video is going to be a bit of a retrospective on fall of the angel fund. We just made our final investment and I just wanted to talk about how it came to be. You know, some things I learned along the way and maybe whether or not I would do it again. I was approached maybe in 2015, early 2016, by the South Dakota Enterprise Institute. That was Tim Weilberg and Tom Eichmann at the time. They had done a fund in sioux fallows about 10 years ago and they were looking to get another one going. So they approached both me and then John Hankhouse from the Everest companies and said, hey, this is what we want to do. What do you think? And I thought it would be a good thing for Sioux Falls, a good thing for the companies we invested in, and also just a good learning experience for me. So the way I got started was in 2016ish. Excuse me, I'm fighting a cold. John and I, we kind of approached all the accredited investors. So wealthy people in business community that we knew in town and said, hey, let's all put in $50,000 into a fund and we'll invest in 10ish companies and we'll kind of see what happens. It'll be a good opportunity to spread some money around different startups. It'll be a good learning experience for everyone and it'll also help solve the challenge of just the lack of capital that is available to startups in Sioux Falls. So we raised 1.35 million. And the way that works is that you get all of your capital commitments from your investors out front and then over the next couple of years you go ahead and invest that money and then as you make your investments, your fund members will write checks to cover those investments. We just finished up our 1.35 million, actually about 1.2 because we have to hold back our last 10% or so for follow on investments and fees and taxes and all that good stuff. But we invested in about 10 different companies, actually 11 in total. Our most recent deal that we've done that, I guess there wouldn't be any media yet would be Query AI. It's a startup out of Brookings that does some interesting AI analysis of data. So in total we invested about 1.2 million. Our other DOs are monitorium, which was acquired earlier this year or last year maybe. We invested Myriad Mobile on Fargo. They're doing really, really well. Equinox is a medical devices company that's got a treatment for glaucoma. They're working on you know, that's going to be one of those. It'll either return 10 to 50 times the amount we invested in it or it'll go to zero. If it works, it will work great. And if it doesn't work, it's not going to work well at all. We invested in Learn Create Build Academy. It's an education company that teaches technology to kids. They're going through kind of a reinvention phase right now. Not 100% sure how that one will play out. We've invested in five friends food company. They make a refrigerated yogurt granola bar called Nomi. They taste really good and then they've been having some slow and steady growth since we invested in them maybe a year and a half ago. Invested in a company called Walkwise. It's an attachment for a walker that will help monitor compliance and reduce falls in seniors. That one's still pretty early, but the tech is solid and I'm optimistic about where that one's going to go. We invested in a company out of Rapid City called Hutchinson Car Audio. They make some car like subwoofers and stuff that are really power efficient. For car audio stuff. I invested in a pain relief device called Oscar Wellness that uses magnets and like electromagnetic fields. We also invested in a company called Nanoperial something. I can't even remember what they do. It's something to do with chemicals and I'm not even going to guess. Then most recently we invested in Query Data. There's one investment in there that didn't even make it under the Falls angel fund books because the amount was too high. But there were, I think 12 of us that got together and put a separate million dollar check into Prairie Aquatech in Brookings. So that was a whole other experience because the enterprises you can help with that. So I had to learn the process to make an LLC for investment purposes, get an ein, the bank account, collect a million dollars in checks from investors and then forward that on to Prairie Aquatech for our investment. So that was a whole other learning experience within itself. Overall, it was a pretty good experience. I really got to stretch my skills, my experience. I got to meet a lot of startup founders, which was fun. I kind of learned how the VC process works, different deal structures, kind of how the other, how other funds in South Dakota and nearby kind of structure their deals. You know, I also learned, kind of really, really learned the importance of due diligence because every presentation sounds good on paper, but when you dive into the company and you look at their Financials and you do a credit check and you know, you really look into the company and its partners and get references. You find out that just because something sounds good on pace when you dig into it, maybe it's not so good. So due diligence is very important. I also got to work with some very high caliber business leaders in Sioux Falls. Maybe an opportunity I wouldn't have otherwise had, but attorneys and bank presidents and CEOs of local companies, entrepreneurs that have done really well. So it was nice to be able to spend some time with that caliber of people every other month. I also learned that this was a member managed fund. So whenever I wanted to do an investment deal, I really had to persuade everybody that the deal was a good idea. A lot of the deals were ones that I had found from my personal network or from Sioux Falls. I was paying really close attention. But not everybody was even beyond the investor or the startup company's pitch. Sometimes they really had to sell deals and say, yeah, this is really solid. Here's why we really need to vote yes on this. So that was a good learning experience as well. Excuse me again for the cold trying to think what else. This fund is now, I guess in its mature phase. So follows the angel fund won't be writing any more checks. And now we kind of sit back and wait. The estimated lifespan of these funds are about 10 years or three years into this fund. So now we are going to wait for our companies to grow and mature and hopefully pay us back our investment and then some as they either raise additional capital or they sell out to bigger companies. You know, now it's just really a wait and see thing. But I do think this doesn't mean that we've lost this capital source versus who falls. We are going to start talking about doing a second fund. So falls Angel Fund two or whatever we end up calling it. We'll probably start having some of those conversations with accredited investors that are interested probably over the summer. And then ideally we would launch again with the second fund in the fall and be able to start hearing pitches again in the fall for companies that are looking to raise money. Before that, there are angel funds and Brookings and Watertown and Aberdeen and Rapid City that are still active writing checks now. So we're certainly happy to make referrals to those funds and for the next six months while we kind of, you know, get our second fund up and going. Certainly also happy to have conversations and point people to the other VC and angel resources that I'm aware of. While we do that. So you know I was the chair chair of the fund. I don't know if I'll be the chair of the next fund maybe co chair or vice chair or something like that but overall good learning experience and something that I feel like I put in my best effort into it and it's nice to see a project that I worked really hard on and did a lot of work into come to kind of a completion status and kind of free up a little bit of time to move on to the next thing. So that was 12 angel funds. Hopefully we'll get another fund going soon but until then I have a little bit of a break and that's kind of nice. Feels good. So if you're curious about Falls angel fund hopefully this video provided you some insight and a little bit of education and maybe this video was more for me than anybody else but it's nice to have that project wrapped up. Thanks for watching.