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PROFILES: DATE IN A BOX MAGNETIC MEDICINE THE MAGIC BEAN
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OKLAHOMA GROW Comprised of over 160 Oklahoma corporations and business groups, the Oklahoma Business Roundtable serves as the state’s major economic development support organization. We are a collaborative non-profit group whose sole purpose is advancing Oklahoma’s economic development – through business start-up, expansion, recruitment and quality improvement programs.
During the past 25 years, the Roundtable has supported hundreds of state, national and international business promotion activities resulting in millions of dollars of new corporate investment throughout Oklahoma. Our members are committed to the growth and diversification of our state’s economy.
We invite you to join us in our efforts! Contact us today. CHAIRMAN Renee Porter, Chairman
Scissortail Community Development Corp. Oklahoma City
OklahOma Business ROundtaBle 655 ReseaRch PaRkway, suite 420 OklahOma city, OklahOma 73104 | 405-235-3787 www.okbusinessroundtable.com 2
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8 INSIDE i&E Profiles
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DateBox 6 Charlie Bean 8 NanoMed Targeting Systems 10
Cover story: Art of the Deals 12 Oklahoma’s startup community celebrates large exits of two i2E portfolio companies Stronger Together 14 Crawford & Co. takes majority stake in Oklahoma City’s WeGoLook
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Native Roots 15 Selexys Pharmaceuticals built and sold by team of native Oklahomans Grow(Rural)OK 16 i2E exports innovative Venture Assessment Program to rural Oklahoma The Impactful 30 18 OCAST programs bring 21-to-1 return to state over past three decades
10 innovators & Entrepreneurs is produced by i2E, Inc., manager of the Oklahoma Technology Commercialization Center. For more information on any content contained herein, please contact i2E at 405-235-2305. © Copyright 2017 i2E, Inc. All rights reserved.
i2E TEAM
BOARD OF DIRECTORS
The i2E management and staff is composed of professionals with extensive experience in technology commercialization, business development, venture investing, finance, organizational.
Stephen Prescott, Chairman OMRF
Scott Meacham President & CEO Rex Smitherman Senior Vice President, Operations Sarah Seagraves Senior Vice President, Marketing Mark Lauinger Senior Vice President, Client Services Tom Francis Director of Funds Administration Judy Beech Director of Finance Carol Curtis Venture Advisor
Richard Rainey Venture Advisor & Director, SBRA Program Kevin Moore Venture Advisor & Director of Angel Investments
Mark Poole, Vice Chair First National Bank of Broken Arrow Michael LaBrie, Secretary McAfee & Taft Leslie Batchelor Center for Economic Development Law
Craig Shimasaki Moleculera Labs Brien Thorstenberg Tulsa Regional Chamber Roy Williams Greater Oklahoma City Chamber Richard Williamson T.D. Williamson Duane Wilson LDW Services, LLC
Howard G. Barnett, Jr., OSU-Tulsa, OSU-CHS
PA R T N E R S Robert Brearton The Oklahoma Experimental Program to American Fidelity Assurance Company Stimulate Competitive Research (EPSCoR) Jay Calhoun Cherokee Nation Businesses Cherokee Nation Michael Carolina OCAST
Chickasaw Nation
Steve Cropper
Choctaw Nation
Carl Edwards Price Edwards Company Presbyterian Health Foundation
Greater Oklahoma City Chamber
Philip Eller Eller Detrich, P.C.
Muscogee(Creek) Nation
Love’s Travel Stops
Cheryl Hill Oklahoma Business Roundtable Hill Manufacturing/Hill Equipment Oklahoma Center for the Advancement Claire Robison of Science and Technology (OCAST) Danny Hilliard Venture Advisor Chickasaw Nation Oklahoma Manufacturing Alliance James Lovely Joseph J. Ferretti Venture Advisor University of Oklahoma Presbyterian Health Foundation Stacey Brandhorst Health Sciences Center U.S. Department of Treasury Venture Advisor & Director of Brad Krieger Venture Assessment Arvest Bank U.S. Economic Development Scott Thomas Administration Philip Kurtz IT Manager CareATC State Small Business Credit Initiative Darcy Wilborn Hershel Lamirand III Client Engagement Director Capital Development Strategies Cindy Williams Merl Lindstrom Underwriting Coordinator & Investment Phillips 66 Compliance Officer Fred Morgan Katelynn Henderson The State Chamber Events Specialist David Pitts Shaun Fair Bank SNB Underwriting Specialist Ryan Posey Jennifer Buettner HSI Sensing Executive Assistant Teresa Rose Crook Kate Nelson Oklahoma City Community Foundation Administrative Assistant Meg Salyer Accel Financial Staffing Claudia San Pedro Sonic Corporation Darryl Schmidt BancFirst
www.i2E.org
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ABOUT i2E WE INVEST IN ENTREPRENEURS TO BUILD SUCCESSFUL HIGH GROWTH OKLAHOMA COMPANIES Over our 18-year history, i2E’s nationally recognized services have provided business expertise and funding to nearly 700 of Oklahoma’s emerging small businesses. With more than $50 million of investment capital under management, we are focused on serving companies in all phases of the business life cycle, from startups looking for their first round of capital all the way to established businesses seeking funding to expand their markets or products. We also are helping lead new business developments into the marketplace more efficiently and more quickly while providing guidance to bring more funding to Oklahoma’s researchers and entrepreneurs. Through our proven business and venture development process, we turn ideas into successful enterprises ... i2E.
W H AT W E D O • Evaluate the market potential of new concepts • Assist with evaluation of business plans, marketing plans and raising capital • Provide guidance in building a management team, business structure and financial forecasting • Assist with developing an effective investor
Welcome from Scott Meacham The year 2016 went out with a bang for our entrepreneurial and investment community. In back-to-back transactions, two of i2E’s portfolio companies saw years of hard work pay off with exits that rewarded not only founders and employees, but investors, as well. In late November, Selexys Pharmaceuticals was acquired by industry giant Novartis Pharmaceuticals in a deal valued at $665 million, making it the largest life sciences transaction in Oklahoma history. In early December, WeGoLook sold an 85 percent stake in the ondemand field services venture for $36.5 million to Crawford & Co., a major player in the financial services industry. In our stories that begin on Page 12, we take a look at how these deals validate the “Oklahoma model” of helping build and support startup businesses developed by i2E as part of our partnership with the Oklahoma Center for the Advancement of Science and Technology (OCAST). We also talked with the entrepreneurs involved to gain their perspective. The exits were great for Oklahoma, but there are also scores of upand-coming innovative startups just starting down the path that Selexys and WeGoLook traveled. We feature three of them in this edition. Beginning on Page 6, learn how DateBox is helping thousands of couples nationwide strengthen their relationships through its unique “date in a box.” And on Page 8, you can read how Charlie Bean evolved from a backyard coffee roaster into a major online e-commerce seller of non-perishable grocery items. On Page 10 we explore the world of nano-biologics and how an Oklahoma City-based company is using nanotechnology to target a potentially deadly heart condition called atrial fibrillation. Elsewhere in this edition of i&E magazine, we celebrate the expansion to rural Oklahoma of our Venture Assessment Program for early stage ventures. We’re taking the newly renamed GrowOK program to rural Oklahomans and Native American tribes to identify and help promising ventures outside of the state’s urban areas. Page 16. Finally, on Page 18 we celebrate the 30-year anniversary of our partner OCAST. The agency ‘s innovative funding programs have yielded a 21-to-1 return for every dollar of state appropriated money over its history. I encourage you to browse this edition and read these success stories that reflect the work that goes on every day here at i2E to build Oklahoma’s entrepreneurial community. Enjoy.
presentation • Assist in obtaining funding through federal grant programs • Work with research universities to encourage commercialization of research technologies • Provide grant capital assistance and equity investment
– Scott Meacham President & CEO
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Profiles Datebox Inc.
DATE NIGHT IN A BOX
Innovative Datebox packs monthly couple’s night into subscription service
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hen Brett Kolomyjec and his wife, Devon, were married four years ago, they received a special wedding gift. It was a box. “And inside the box were some movie tickets, a game and some dessert items,” Brett Kolomyjec said. “There was a note that said ‘the first time you feel like you are drifting from one another, use this to have a date night together, have a fun evening. Everything is here that you need.’" The unique wedding gift did more than provide a date night for the Kolomyjecs. It sparked an idea that eventually became a fast growing, Oklahoma City-based startup called Datebox. It turns out the vision to rediscover date night inspired co-founders Marcus Morrison, Ashton Owens, Chase Layman, and Jeff Cherry to jump on board in an effort to build Datebox from the ground up. For a monthly subscription price of
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roughly $40, couples receive a box each month that includes everything needed for a fun, creative evening together. That might include instructions and items needed to make sushi, or a faux camping night along with ingredients to make s’mores, playing cards and even a movie rental. Obviously, there was pent-up demand for such a service. Datebox has already shipped nearly 100,000 dates since its inception in November of 2015, and the company now serves subscribers in all 50 states. “The main problem we are trying to address is that over time people just don’t spend time together,” Kolomyjec said. “At the beginning, relationships are fun, exciting and couples do new things together. But as time goes on you bring life into the mix – kids, jobs, bills. Eventually, all those things you used to do to spend time together begin to fade.”
That’s where Datebox steps in. The prospect of a monthly date night and a unique activity livens up a relationship, he said. “There’s actually a chemical reaction that happens in the brain when couples are experiencing new things together,” Kolomyjec said. “It’s the same reaction that occurs in the brain when a person is falling in love. As we all know, this stage of any relationship is a thrill, and by doing new, exciting things together, we keep that feeling alive in our relationships and marriages.” Customers find their way to Datebox through online advertising and a strong social media presence, along with testimonials from select “influential” users. There is a story in that strategy. The Kolomyjecs knew a couple that appeared on the popular show “The Bachelor” and sent them a Datebox. The couple posted a picture of their box on
“We, as a team, believe there is nothing more important in this world than our relationships and marriages, and our hope is that couples will be inspired to think and act with that same belief.”
Instagram, introducing thousands of new couples to Datebox. Since then, other couples appearing on the show have reached out to Datebox wanting to try the product and promote it. Datebox operates with 13 employees out of an Oklahoma City office, along with a shipping warehouse located in Seattle and staffed with about 70 workers who pack the Dateboxes for shipping each month. So, who brainstorms each month’s “date night” for subscribers? “It’s a group effort for our whole team,” he said. “We are always encouraging our team to be thinking through new ideas. There are limitations on what we can send, what fits in the box, what’s economical to send.” Another challenge that the company is tackling is that of “personalizing” each date for individual couples. That requires data collection and algorithms that can learn the likes and dislikes of each couple. “Every couple is so different in what they like doing,” Kolomyjec said. “The challenge for us is figuring out how to learn about each couple through on-boarding and data collection ahead of time so we can provide them a great experience.”
Kolomyjec was introduced to i2E early in the company’s history, and says that relationship has helped advance the Datebox concept. “Being introduced to i2E was great,” he said. “They helped us meet people in the community, network and things like that. I’ve been impressed with the way they have supported us, learned what we do and come alongside us. They really do care about creating jobs and growing the Oklahoma City startup community.” i2E is also leading a Series A venture investment in Datebox that will provide funding for even more growth. And that will lead to more date nights and stronger relationships. “The hope and mission of Datebox, is that it will truly help couples all over the country,” Kolomyjec said. “We work daily to inspire meaningful growth and excitement in the relationships and marriages of the subscribers we serve. We, as a team, believe there is nothing more important in this world than our relationships and marriages, and our hope is that couples will be inspired to think and act with that same belief.” Now, that’s out-of-the-box thinking.
– Brett Kolomyjec
Brett Kolomyjec CEO Oklahoma City, OK Employees 13 Year Founded 2015
Product or Technology Datebox provides a box with everything needed for a fun, creative and unique date night every month. Future Plans The company is building a platform that learns, profiles and provides predictive analytics so that it can create dates that match the likes and dislikes of individual couples. Funding The compay was founded with funding from friends and family. Recently, they closed a $2.6 million Series A investment led by i2E. Major Milestones Kolomyjec said he considers the company’s top milestone to be the first month it shipped 10,000 Dateboxes to subscribers.
www.getdatebox.com
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Profiles Charlie Bean
IT'S BEAN A PLEASURE Charlie Bean evolved from a hobby coffee roaster to successful e-commerce grocery business
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harlie Bean is an Oklahoma City-based e-commerce business that has its roots in a one-man coffee roasting operation in the back yard of the home of Charlie Mangus. In a barbeque grill. As a hobby. “I got pretty good at it, and had friends and family that were asking for it,” Mangus said of his coffee roasting avocation. “So, I got a friend to start a website for me and developed the character, Charlie Bean, after my name and with “bean” after the coffee bean.” Soon, he began selling his coffee online and opened a Mustang coffee house under the Charlie Bean brand. He then began selling coffee flavoring syrups online.
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“That’s where we kind of started,” he said. “Amazon told us we were monopolizing the market on coffee syrups. We were distributing products, just supplying the coffee world in general. That just got bigger.” Today, Charlie Bean markets thousands of grocery products worldwide through its e-commerce business on retailing giant Amazon.com. Although it still operates under the Charlie Bean brand, coffee now only accounts for a small percentage of the company’s business. It is known as “e-Home Shopping” on Amazon. Because of relationships Mangus had with major food distributors, Charlie Bean was able to expand the products it
markets online to a full grocery menu of non-perishable foods. The company sells everything from ramen noodles to mayonnaise to barbeque sauce and beyond. “That was a paradigm shift for us,” Mangus said. “We were able to bring in huge amounts of volume from distributors of food across the country or direct from manufacturers. It allowed us to play in the game and operate in a way that we could grow big time.” Josh Mangus, Charlie’s oldest son, is Charlie Bean CEO. Josh’s brother, Matt, serves as the company’s head of purchasing and its chief analyst. “Both of them started in the warehouse, so they know the business from the ground up,” Charlie Mangus said.
“Everyone we meet with from i2E always has positive things to say, even when they are giving criticism. It is very constructive.” – Josh Mangus
Operating with 16 employees out of an industrial park in far western Oklahoma City, Charlie Bean is embarking on an ambitious automation plan that will allow it to operate at a much faster pace. The company reached out to i2E to explore potential investment that would fund the development of software to automate the sourcing of inventory and other business processes. “A lot of what we do is based on technology,” Josh Mangus said. “By automating everything, we will be able to source products faster, purchase products faster and monitor the products as they sell faster. We will be able to grow faster.” Charlie Mangus compared the company’s current operations to operating a car that has to be manually pushed to make it go. “We need an engine,” he said. “Right now it’s a manual type system, where we have to enter piece by piece what we are doing. What we are needing is to revolutionize that software and go faster. Rather than one product or two products or five products a day, we could go to hundreds or thousands and know in real time what works and what doesn’t.” Charlie Bean is seeking a financing round led by i2E that would raise $1.5 million to build the automation software, along with funding other needs such as working capital for inventory growth, personnel and marketing.
“I would say a lot of the marketing dollars would go toward Amazon, but also toward the wholesale side of our business and marketing customers back to our own website,” Matt Mangus said. The relationship with i2E has helped the company explore growth areas in which it can concentrate, Josh Mangus said. “They have been really able to hone in on the specific areas of our company that they see potential growth,” he said. “Everyone we meet with from i2E always has positive things to say, even when they are giving criticism. It is very constructive.” Despite the growth of its online grocery distribution business, there is still some coffee left in Charlie Bean. Although the company no longer operates the coffee house, it markets its own brands of roasted coffee both locally and online. And coffee is where it all started. “It was just a hobby that turned into this small little fun business type thing,” Charlie Mangus said. “Then we opened the Charlie Bean coffee shop. Without that happening, the ability to distribute the products from these manufacturers would not have happened. We were in it at the right time, at the right place.”
Josh Mangus CEO Oklahoma City, OK Employees 16 Year Founded 2007
Product or Technology E-commerce food retailer on Amazon. com and through its own website Markets Targeted Consumers who seek convenience, choice and price advantages of online shopping. Future Plans Charlie Bean plans to implement automation software that will allow it to source and distribute thousands of products much more quickly than currently. Funding Initially, self-funded through sales; i2E led a $1.5 million investment round to implement automation software. Major Milestones Developing the ability to source and distribute thousands of nonperishable grocery items to a major online retailing site. charliebean.com
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Profiles NanoMed
ON TARGET NanoMed Targeting Systems uses magnetic nanoparticles to stop atrial fibrillation
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he number of people in the United States suffering from a heart condition known as atrial fibrillation is rising at an alarming rate. Atrial fibrillation (AF) is a condition where atria of the heart beat irregularly at very high rates, afflicting more than 5 million Americans in 2010. Projections show that there will be 12 million atrial fibrillation patients by 2030. The condition is the primary cause of strokes, worldwide, which disable or kill patients, said Dr. Kenneth Dormer, Chair and Professor of Physiology, Integrative Physiology and Pharmacology Department, Liberty University in Virginia. “The atrium quivers, the blood clots and the clots end up in the brain,” Dormer said of the potential effects of atrial fibrillation. “The current technology for getting rid of that condition is often ineffective.” An inventor as well as a Ph.D.-level physiologist, Dormer had an idea for a magnetically targeted drug delivery alternative to current methods for defeating atrial fibrillation. He is cofounder with Alex Harel of an Oklahoma City-based company called NanoMed Targeting Systems, Inc. Dormer was a professor and researcher at the University of Oklahoma Health Sciences Center for more than three decades before taking the academic position with Liberty University’s new College of Osteopathic Medicine in 2013. Harel, president and CEO of NanoMed Targeting Systems, is a retired Lt. Colonel in the Israeli Air Force who has been involved in founding several startup companies in Israel. One of those Israeli companies had developed clinical 10
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electromagnets that are widely used in MRI machines worldwide. Currently, patients suffering from atrial fibrillation are either placed on medicine that may or may not work or they are undergo a risky, expensive procedure called RF ablation. That’s a procedure in which physicians insert a catheter inside the heart and make a series of small burns to kill off nerves responsible for causing the condition. Dormer’s idea was to insert magnetically charged nanoparticles into the patient’s heart and guide them to the precise area needed to deliver a therapeutic substance that would stop the nerve cells that disrupt the heart’s normal electrical rhythm and cause AF. “When these nanoparticles are pulled out of the circulation of the heart, and into these nerve bundles on the surface of the atrium, they immediately release their therapeutic payload, which stops the nerves,” Dormer said. “What we have is a disruptive technology; NTS is a pioneer in this approach to AF.” It wasn’t until Dormer and Harel met at a special presentation at an Oklahoma meeting of the Oklahoma Israel Exchange 2007 that the idea began to become a reality. Harel pitched his electromagnet technology as part of the Israeli delegation making the Oklahoma presentation. “I came to Oklahoma for a visit, and there I met a team headed by professor Dormer that was working on magnetic particles,” Harel said. “We started talking, and one thing led to another. We decided there was common ground for cooperation between us.” Subsequently, Dormer flew to Israel where he made a presentation
“Everything is looking good so far but we are cautiously optimistic. It would be great to bring this project to fruition in Oklahoma, where it began.” – Dr. Kenneth Dormer
on behalf of the Oklahoma Economic Development Council while checking out Harel and his colleagues at Brilliant Biomedical Magnetic Solutions. Harel and Dormer co-founded NanoMed Targeting Systems in 2010. Other team members are Drs. Sunny Po, Director of Clinical Electrophysiology at OUHSC’s Heart Rhythm Institute, Benjamin J. Scherlag, Professor of Medicine/Cardiology at OUHSC-HRI, Isaac Rutel, Associate Professor of Radiology, Medical Physicist at OUHSC, and Udi Katzenelson, Physicist and magnetic systems specialist.
has shown that its technology works in animal models, Dormer said. The company plans to seek FDA approval as a medical device delivering a therapeutic. “Having assisted getting 3 devices through FDA approval while in Oklahoma, we have found that it is more economically feasible to follow the device route rather than the new drug route, even though the therapeutic is a nanoformulation.” Before NTS gains FDA approval of its device, the company will first need to demonstrate scaled up manufacturing of our nanoformulation, Dormer said. It
Alex Harel CEO Oklahoma City, OK Employees 6 Year Founded 2010
Product or Technology Innovative use of nano particles guided by electromagnets to deliver medicine internally to patients. Markets Targeted Initially, the company plans to use its technology to provide treatment for patients who suffer from a heart arrhythmia known
Nanoparticles in the blood stream
as atrial fibrillation.
External magnetic field
Future Plans NanoMed Targeting Systems plans to expand to patients who suffer from postoperative atrial fibrillation and then to other conditions such as cancer. Nanoparticles pulled by the magnetic field
Funding Early funding through an OCAST grant, along with angel investors and a leading investment group from Taiwan. Major Milestones
Nanoparticles penetrating the artery wall
The company licensed technology from OU and obtained early grant funding from OCAST. It has since received investment from electro physiologists, the Virginia Center for Innovative Technology, the Center for Integrative Nanotechnology (Sandia National Laboratories) and from a leading investment group in Taiwan, where a B-round is in the works, Harel said. “i2E will be investing in this B round we are now working on,” he said. “This investment would basically bring us to clinical trials.” NanoMed Targeting Systems
Drug nanoparticles released
seeks to accomplish that in Oklahoma. “It’s a growing market as our population ages and there is some correlation with obesity and other conditions where the atria are overworked and change their structure,” Dormer said. It’s a market waiting for a better, safer, less costly technology. NanoMed Targeting Systems may have the answer. “Everything is looking good so far but we are cautiously optimistic, Dormer said. “It would be great to bring this project to fruition in Oklahoma, where it began.”
The company has shown that its process of medicine delivery works in animal models. nanomed-systems.com
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THE MODEL OF SUCCESS Selexys, WeGoLook exits validate Oklahoma’s entrepreneurial support system through i2E and OCAST
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n the span of two weeks in late 2016, Oklahoma celebrated two of the biggest successes in the history of the state’s technology-based startup community. First, in late November, Oklahoma City’s Selexys Pharmaceuticals was acquired by pharmaceutical industry giant Novartis Pharmaceuticals in a deal valued at $665 million. The Selexys acquisition is the largest life sciences deal ever in Oklahoma. The deal had its beginning almost 20 years ago in the laboratory of University Oklahoma and Oklahoma Medical Research Foundation scientist Dr. Rodger McEver. McEver made a series of discoveries about a protein called P-selectin that eventually became the basis of a therapeutic that treats pain crisis symptoms of sickle cell disease. Selexys CEO Dr. Scott Rollins and his team of seven are continuing their drug development efforts through a second company called Tetherex, which was spun out of Selexys before the Novartis deal. Then in early December, Oklahoma Citybased WeGoLook announced that a publicly traded financial services company, Crawford & Co., had acquired a majority stake in it for $36.5 million. Co-founder Robin Smith and her team were rewarded for building a homegrown technology company that draws on the emerging sharing economy. WeGoLook employs an army of 30,000 contract workers known as “Lookers” who perform inspection and task completion services nationwide and beyond. WeGoLook remains an Oklahoma Citybased company with more than 110 local employees. The implications of bringing $700 million of new revenue into Oklahoma go far beyond the two local companies involved. For i2E and our partners at the Oklahoma Center for the Advancement of Science
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and Technology (OCAST), the successful exits validate the “Oklahoma model” developed to nurture new technologies, fund fledgling companies and build entrepreneurial talent across Oklahoma. Oklahoma media certainly noticed. The Oklahoman published an editorial that quoted i2E CEO Scott Meacham and urged state legislators to halt cuts of state appropriations to OCAST, which have fallen 44 percent since 2008. “OCAST has regularly had to fight to keep its budget from shrinking even when the state’s finances were in much better shape,” the newspaper wrote. “When they get their red pencils out next session, state budget writers should recall these most recent success stories and OCAST’s long history of success. Oklahoma needs more, not less, of what OCAST and its partners are producing.” As The Oklahoman noted, OCAST’s most recent annual report showed that it has produced about 2,100 high-paying jobs over the course of its 30-year history. And its return on the state’s investment in 2015 was a remarkable 33-to-1. In addition to validating the state’s economic development model, these acquisitions are providing financial returns to Oklahoma investors and jobs to Oklahoma residents. This is the reason that the state puts money into seed-stage deals. Members of SeedStep Angels, individual angel investors, and investors in other i2E managed funds, including the Oklahoma Seed Capital Fund, the Accelerate Oklahoma Fund, and the Oklahoma Angel Fund I, all have seen their faith in investing in Oklahoma startups rewarded. Selexys achieved an exit in less than 10 years, with the first institutional capital provided by OCAST, i2E and the Presbyterian Health Foundation. Those investments were critical to attracting other investors that eventually led the company to Novartis and clinical trials that proved effectiveness of its technology, Rollins said. “i2E was a very early investor in Selexys,” he said. “That was very important because other Oklahoma investors wanted to see that they were willing to back Selexys before they put money into the deal. Selexys
was largely funded by private investors in Oklahoma.” Finally, these two big exits in the two dominant sectors of innovation — information technology and biotech — put Oklahoma solidly on the map as a state with exciting, investable startup deals. Oklahoma entrepreneurs have delivered on homegrown, breakthrough, disruptive technologies. We've built our own continuum of early stage and seed capital when VCs were hard pressed to bring their money here. We've proven that Oklahoma entrepreneurs, scientists, and technologists have the talent to solve big problems for big markets. WeGoLook’s Smith said the back-toback exits at her company and Selexys will “help open the doors” to other startups who can use them as examples of success. WeGoLook leveraged i2E's model and services from the beginning, and with i2E’s assistance found a path to a broader commercial market attractive to strategic acquirers. WeGoLook exited in less than three years, with i2E, once again, being its first institutional investor as well as leading each of its investment rounds. “There are so many incentives for companies to move in here from out of state, and I love that, too,” Smith said. “But to incentivize people here to create jobs and to help educate the world about our city and our state, I think that is important.” Before these two big exits, i2E had accomplished a lot of important things — including providing funding and business expertise to nearly 700 of Oklahoma's emerging small businesses as well as achieving great results in terms of jobs created and investment attracted into Oklahoma-based startups — but we hadn't had a big portfolio exit. The exit is the ultimate goal and measure of success for any early stage venture investor like i2E. Now we — and Oklahoma — have two. “We have a winning formula here,” Meacham said in a column he writes for both The Oklahoman and the Tulsa World newspapers. “Let’s hope everyone in the state is paying attention.” SPRING 2017
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STRONGER TOGETHER Oklahoma City’s WeGoLook poised for more growth after acquisition by Crawford & Co
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headline on the webpage of Oklahoma City’s WeGoLook proclaims “We’re Stronger Together.” It’s a phrase that describes the business force created by the $36.5 million acquisition of WeGoLook by Crawford & Co., one of the world’s largest providers of claims-management solutions to the risk management and insurance industry. But the words also signal a seismic shift in the financial services industry. WeGoLook and its 30,000-plus field agents known as Lookers are disrupting whole industries by offering a more efficient and cost-effective way of doing business. Founded seven years ago as an asset verification business for buyers of online merchandise, WeGoLook has emerged as a technology driven alternative across several industries, said co-founder and CEO Robin Smith.
“We are augmenting, supplementing a company’s labor force, and in some cases we are their only labor force,” Smith said. “We are able to come in and help redefine the entire workflow and process of how these carriers are doing business using technology.” There is a phrase that describes the revolution that WeGoLook is leading. Call it the “sharing economy.” Or the “gig economy.” “That is this notion that someone has something that someone else can utilize,” Smith said. “It’s time for our Lookers. For Uber, it’s the drivers. For Airbnb, it’s the rooms.” What it means is that like ride-sharing Uber or room sharing service Airbnb, WeGoLook has taken the concept of a short term “gig” and morphed it into prime supplemental income for thousands of people and alternative field representatives for the insurance, banking, courier and other industries. “You take an insurance carrier who has a $50,000 to $60,000 per year employee driving a fleet vehicle out completing pretty simple tasks; taking photos of an intersection, requesting police reports,” Smith said. “With WeGoLook you can request those same services on demand, at a much faster turn-around time. And it’s more cost effective.”
All of which leaves corporate employees to focus on the more complex tasks or be shifted to another area of the business. Back up about 7 years, when Smith and her co-founders had the idea to create a company that would inspect merchandise on demand before an online buyer paid for it. (“What’s really neat is that, as eBay Motors official inspection arm, we still serve that individual consumer marketplace,” she said.) Smith was so focused building her team of Lookers worldwide that she didn’t consider the potential “exit,” such as that accomplished with Crawford & Co. She remains the company’s chief executive after the acquisition. “I never had any exit plans,” Smith said. “My partners were like ‘if we can get X-dollars out of it we would want to sell. My goal was to make it really big from the beginning. Money has never been my main focus.” Early on in the company’s history, WeGoLook began working with i2E, and Smith went through the process of writing a business plan for the venture. The relationship cooled until then i2E Venture Advisor Kenneth Knoll called on Smith to see how the company was progressing. “He came in and I told him all the things that were happening, and he said ’we can help you with this, this and this,’ ”
WeGoLook’s 30,000 field agents know as ‘Lookers’ verify all kinds of property, from real estate to the condition of automobiles being sold or those that have been in accidents.
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Smith said. “And it was very helpful at that time to put us in front of the SeedStep Angels group and get us the investment that we needed. “So, I feel like i2E is a good part of our success.” Knoll eventually went to work for WeGoLook, and today is the company’s Chief Operating Officer. He is a University of Tulsa graduate and alumnus of the i2Emanaged Donald W. Reynolds Governor’s Cup competition, where he was part of a winning team. “I think our strengths are very different from each other, but we complement each other very well,” Smith said. “He’s incredibly talented when it comes to business and finance. He’s a big part of our success moving forward.” The Crawford & Co. acquisition created a stronger WeGoLook and ensured its 111 employees of a secure career with the company. For WeGoLook’s CEO, the purchase allows her to focus solely on “scale,” relieved of worries over financial challenges. “I know our employees have an amazing career path,” she said. “It just allows me to put all my energy into scaling. We definitely plan on staying in this building. We love this location.”
Photo Credit: Worldwide Business
The “Stronger Together” headline on the WeGoLook website can be interpreted in another way; that of an Oklahoma entrepreneurial community that supports and invests in startups such as WeGoLook. The rewards go both ways. “We did give our investors an 8X return within 24 months,” Smith said. That’s stronger together.
it's a BIG DEAL When Oklahoma City-based Selexys Pharmaceuticals was sold to industry giant Novartis Pharmaceuticals in an historic Oklahoma exit valued at $665 million, the enormity of the deal may have overshadowed the importance of its technology. Selexys developed a therapeutic that relieves pain crisis for millions of people worldwide who suffer from sickle cell disease. And that’s the most important element of the deal, said Scott Rollins, Selexys President and CEO. “Sickle cell disease is a very underserved population, primarily African American, and there hasn’t been a sickle cell drug approved in over 25 years,” Rollins said. “I think it is important that we did it here in Oklahoma, with native Oklahomans in the management team.”
Selexys has its roots in a scientific discovery by Dr. Rodger McEver in the 1980s. McEver led a team of researchers from the University of Oklahoma Health Science Center that made some discoveries about a protein known as P-selectin. In 2002, McEver co-founded Selexys with Dr. Richard Cummings and Richard Alvarez based on that research. The trio managed Selexys until 2008, when they recruited Rollins as President and CEO. “Selexys gave me the opportunity to come back home, to be nearer my family, my parents, my brothers and sisters, and to be President and CEO of a company based here in
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Oklahoma,” Rollins said. An Oklahoma native and OU educated immunologist and entrepreneur, Rollins cofounded and built Alexion Pharmaceuticals from startup to a $27 billion publicly traded industry giant it is today. The technology on which Alexion is based was discovered by Rollins while working as a graduate student in a laboratory at the Oklahoma Medical Research Foundation. Rollins was later invited to be a postdoctorate fellow at Yale University, which he eventually left to co-found Alexion and develop a therapeutic called Soliris that treats a rare blood disease. Back in Oklahoma as Selexys CEO, Rollins began working with Dr. Philip Jones to attract investors whose capital would enable the company to advance the sickle cell drug called SelG1 and take it into a Phase 1 clinical trial. Investment by i2E in Selexys through the Oklahoma Seed Capital Fund was key to helping Rollins pitch the company to subsequent investors. “That was critical to the success of the company to have that kind of solid backing such that other local investors were willing to come in and put their money into Selexys,” Rollins said. “Phil and I were able to go out and raise $10 million locally from a group of high net worth angel investors.”
Attracted by the solid data developed by Selexys in advancing its sickle cell drug, Novartis signed a deal with the Oklahoma company in 2012 and provided a critical payment. “That non-dilutive payment allowed us to execute a Phase 2 clinical study of SelG1 in patients with sickle cell disease,” Rollins said. “The deal specified that at the end of the trial, Novartis would have the opportunity to purchase Selexys and the drug we were using in the sickle cell trial for $665 million.” The double-blind clinical trial across 200 patients nationwide yielded positive results, triggering the historic deal. “It is certainly by far the largest biopharma deal ever done in the history of Oklahoma,” Rollins said. “It also provides a significant return to those investors who entrusted their money to Selexys.” i2E, OCAST and angel investors across Oklahoma are among those who were rewarded by the Novartis deal. “This exit, along with the subsequent successful exit of Oklahoma City’s WeGoLook for $36.5 million validates the Oklahoma model of helping build and support startup businesses developed by i2E as part of our partnership with OCAST,” said i2E CEO Scott Meacham. “The exit is the ultimate goal and measure of success for any early stage venture investor like i2E. Now we have two.”
For Rollins and his team of seven at Selexys, the sale of the company to Novartis didn’t end their drug development work in Oklahoma. They are now advancing a therapeutic to treat Crohn’s Disease within a company called Tetherex, which spun out of Selexys before the Novartis deal closed. “The truth is, with Selexys, nothing is going away,” Rollins said. “All the Selexys employees are now Tetherex employees. We just keep reinventing ourselves. We are already in the midst of treating about 15 or 20 patients with Crohn’s Disease with a new drug.” Bottom line is that Selexy created a new therapeutic that promises to bring pain crisis relief to millions of sickle cell patients. It is already a phenomenal success for Oklahoma’s startup community. “That drug will be something for many, many years to come that Oklahomans can be proud of,” Rollins said.
THE ROAD LESS TRAVELED i2E exports Venture Assessment Program concept to rural Oklahoma as GrowOK Program
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i2E is taking its popular Venture Assessment Program for early stage entrepreneurs to rural Oklahoma under a new name, GrowOK, with a mission to identify and help rural entrepreneurs and Native American enterprises to grow their businesses. The GrowOK program will debut this spring with a curriculum targeting rural and Native American entrepreneurs, said Rex Smitherman, i2E’s Senior Vice President of Operations. That concept is being exported to rural Oklahoma with assistance of a $199,749 federal grant and six Oklahoma funding partners. “Our mission with the GrowOK program is to find some exciting companies that we might be missing in the rural areas of the state and expand our reach,” Smitherman said. “We currently look at rural opportunities, but we don’t see the volume we do in the metro areas of the state. This program will allow us to aggregate and work with more rural entrepreneurs.” The federal Economic Development Administration (EDA) awarded the grant in November. State partners include the Cherokee Nation, Choctaw Nation, Chickasaw Nation, Muscogee (Creek) Nation, Oklahoma Business Roundtable and the Oklahoma Center for the Advancement of Science & Technology (OCAST).
Rural Enterprises of Oklahoma, Inc., is also a supporting partner. “Our tribal partners have really embraced this,” Smitherman said. “They see it as another tool for their small business development organizations, as a way to bring in some outside expertise and as another business growth opportunity for their members. We have received a nice reception.” The first GrowOK classes should be launching with five to six companies in late spring with subsequent classes running concurrently in additional rural locations with individual instructors provided by i2E. “What we will teach is how to grow your business, how do you add jobs, how do you expand revenues from outside the immediate circles you are currently getting them from,” said Mark Lauinger, i2E’s Senior VP of Client Services. “So, reach outside the city, outside the county, outside the region – broaden those concentric circles.” The curriculum will challenge rural entrepreneurs to identify their customers and determine whether their concept solves a true market need. “We want to sharpen the lens on product market fit, customer identification and then replicating that,” Lauinger said. Added Smitherman: “It’s a true, rigorous, third-party evaluation of your idea. The program is designed to provide hard data that will allow entrepreneurs to decide whether they should move ahead with the idea, tweak the idea, or take their resources and put them somewhere else.” Federal funding for the GrowOK program was awarded to i2E from among a pool of more than 215 applicants nationwide as part of the EDA’s Regional Innovation Strategies Program (RIS). i2E was one of only 35 not-for-profits, institutions of higher education and entrepreneur-focused organizations from 19 states across the nation that were awarded a total of $15 million to create and expand initiatives to support entrepreneurship. “Our program will help entrepreneurs perform market analysis and figure out the commercial opportunity for their business resulting in the creation of new jobs and economic opportunity in rural Oklahoma,” said Scott Meacham, i2E’s President and CEO. “We are pleased that EDA saw the value that our program brings to rural Oklahoma and the potential impact of partnering with Oklahoma’s tribal governments and statewide rural economic development entities like Rural Enterprises of Oklahoma.”
CHEROKEE NATION The Cherokee Nation claims more than 317,000 citizens, over 8,000 employees and a variety of tribal enterprises ranging from aerospace and defense contracts to entertainment venues. In 2015, the Cherokee Nation’s Small Business Assistance Center provided technical assistance to more than 7,750 aspiring entrepreneurs and existing business owners in workshop settings. cherokee.org CHICKASAW NATION The Chickasaw Nation has 49,000 members and a tribal government focused on building a diverse economy to provide programs and services to members. The Tribe operates the Chickasaw Nation Small Business Development Center (CNSBDC), providing one-on-one business counseling, economic development assistance and training to Chickasaw entrepreneurs. chickasaw.net CHOCTAW NATION As of 2011, the Choctaw Nation had 223,279 enrolled members, of which 84,670 live within the state of Oklahoma. The Choctaw Nation’s Division of Commerce created the Choctaw Business Development Center (CBDC) to provide a path for job creation, economic growth, diversification and sustainability. The CBDC is helping launch and grow successful startup ventures in southeast Oklahoma. choctawnation.com MUSCOGEE (CREEK) NATION Headquartered in Okmulgee, the Muscogee (Creek) Nation claims over 77,000 enrolled members. The Tribe’s Department of Commerce recently established the Creek Nation Small Business Development Center to provide counseling and support for member-owned small businesses. GrowOK will be a complementary tool for the Creek SBDC targeting highgrowth concepts. muscogeenation-nsn.gov OKLAHOMA BUSINESS ROUNDTABLE The Oklahoma Business Roundtable is a private, not-for-profit organization with the mission to encourage and promote Oklahoma's economic development. The Roundtable provides private funding in support of the economic development efforts of the Governor, the Oklahoma Department of Commerce, and other economic development organizations. okbusinessroundtable.com OKLAHOMA CENTER FOR THE ADVANCEMENT OF SCIENCE AND TECHNOLOGY (OCAST) OCAST is a state agency established to foster innovation in existing and developing businesses in Oklahoma. OCAST supports basic and applied research, facilitates technology transfer, provides seed capital for new innovative firms, and helps Oklahoma’s small and medium-sized manufacturing firms become more competitive through increased productivity and modernization. ok.gov/ocast RURAL ENTERPRISES, INC. OF OKLAHOMA (REI) REI is Oklahoma’s only statewide rural economic development organization. Headquartered in Durant, REI is part of the Choctaw Nation of Oklahoma Promise Zone designated in 2014 by President Obama. REI helps entrepreneurs navigate through business resources and appropriate lending programs. reiok.org SPRING 2017
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PROMISE KEEPER After 30 years, OCAST still working to diversify Oklahoma’s economy
Before there was a state agency known as the Oklahoma Center for the Advancement of Science and Technology (OCAST), the Great Oil Bust of the 1980s took a devastating toll on Oklahoma’s economy. As oil prices declined throughout the decade of the ‘80s, thousands of jobs were lost and the impacts trickled into other industries. The economy bottomed out in 1987 when 31 banks failed across Oklahoma. In a state dominated by the energy sector, Oklahoma’s unemployment rate hit 7.1 percent in October of 1987. Of those who had jobs, 1 in 11 Oklahoma workers were employed in the energy industry. But 1987 was also the year that the state legislature took steps to ensure that Oklahoma’s economy never again depend so heavily on a single industry. That was the year that HB 1444 passed. Known as the Economic Recovery Act, the legislation created the OCAST among its various initiatives. In a 1989 article, The Daily Oklahoman said that OCAST “represents the bright and shining part of 1444.” Three decades later, OCAST continues to live up to that promise. OCAST has implemented a series of innovative programs that encourage both basic and applied research, creation of technology-based businesses, STEM (science, technology, engineering and mathematics) education and Oklahoma-based employment of the state’s college graduates. In 2016, the 30-year return on the investment of state appropriated dollars was 21-to-1, which means that for every state dollar invested through an OCAST program, 21 were returned through revenue imported into Oklahoma through sales or federal contracts. The effort to diversify Oklahoma’s economy is working. Today, only 1 in 24 workers are in the energy sector. Even with the energy sector ravaged by another period of low oil and gas prices, the state’s unemployment rate stood at 5.1 percent in November 2016, two full percentage points below that of the oil bust of 30 years ago. “Diversification is working, and our economy is more resilient than ever to the ebbs and flows of energy prices,” C. Michael Carolina, OCAST executive director, wrote in the forward to the agency’s 2017 Impact Report. OCAST has done its job even as state appropriations that fund its work have declined by 38 percent over the past decade. In fiscal year 2007, the legislature appropriated $22.9 million to OCAST, but by fiscal year 2017, that number had shrunk to $14.1 million. What the decline in funding translates to are less dollars to fund promising research projects across the state, less capital to invest in innovative startups through the Oklahoma Seed Capital Fund managed by OCAST partner i2E, and fewer paid internship positions for Oklahoma college students. “The lack of funding hits our research assistance programs especially hard,” Carolina said. “Through cost savings and efficiencyrealizations we have been successful in mitigating the impact to our programs. As we move forward, regrettably, we will continue
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to fund fewer and fewer research projects each year unless something changes.” Still, there are spectacular success stories achieved despite the funding decline. Seed Capital Fund investments by i2E in Selexys Pharmaceuticals and WeGoLook achieved astonishing returns in late 2016 with the sale of each company. Selexys closed a deal with industry giant Novartis Pharmaceuticals in a deal valued at $665 million, while WeGoLook sold a majority share to national insurance industry leader Crawford & Co. for $36.5 million. The OCAST Intern Partnership program has been described as a “win-win-win” for the state’s universities, businesses and students. In 2016, there were 42 interns placed in laboratories or businesses across the state, many of whom will find permanent employment there. “Through the OCAST Intern Partnership program, we have hired probably 10 or more employees who were originally interns,” said Tom Jobe, SensiQ’s Chief Operation Officer. “In fact, our chief scientist right now was originally one of our interns from the University of Central Oklahoma. It’s been wildly successful.” Some of the state’s most successful startups have their roots in an OCAST grant program such as the OARS program. Dr. Paul DeAngelis, Presidential Professor of Biochemistry & Molecular Biology at the University of Oklahoma Health Sciences Center, cites an important example that impacted two of the four companies that have spun out of his laboratories. “OCAST has really helped us in the past, in particular two applied research and commercialization grants that were particularly successful,” Dr. DeAngelis said in describing grants for his companies known as Hyalose and Heperanix. “OCAST gave the extra resource boost needed to leap the chasm of the "valley of death” that looms in the early days of any company or new venture.” The contrast between 2017 and 1987 could not be more apparent than the ongoing impact that OCAST is making on the Oklahoma economy. “Thirty years ago, Oklahoma suffered a historic collapse in the energy sector,” Carolina said. “Thirty years later, we are celebrating our accomplishments while looking forward to continuing to develop and manage innovative programs that help to diversify our economy.” From the earliest days of its history, Oklahoma stakeholders anticipated the promise of OCAST. The following is an excerpt from a report titled “State Policy and Economic Development in Oklahoma: 1988,” which was prepared for the Oklahoma 2000 initiative: “The 1987 Legislative Session produced some remarkable initiatives for economic development in Oklahoma. Most notably, HB 1444 introduced a new organization, with the potential for clear leadership in economic development, and significant measures for financing economic diversification efforts. This financing can (generate) benefits for firms expanding or locating in Oklahoma, start-up firms and improvements in the university research programs. The most significant results of this legislation, however, are likely to be sometime in the future. Further, sizable financial commitment is necessary.” The future is now.
Innovation
30 Years of Innovation Excellence
The Oklahoma Center for the Advancement of Science and Technology works to diversify Oklahoma’s economy through strategic investment in innovation, science and technology. The investment we make locally improves the quality of life globally, while growing Oklahoma's economy. Since inception OCAST has: • funded 2,587 projects • made investments of more than $278 million in R&D
• attracted $5.8 billion in private sector and federal funding • had a return on investment of 22:1
Small Business >> Startup Capital >> Manufacturing >> Internships >> Health >>
Celebrating 30 years of growing and diversifying Oklahoma’s economy
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FORTUNATE FUTURE
In Oklahoma City, our one-of-a-kind beginnings have led to a spirit of entrepreneurship and bootstrap-based success. Growth in our tech, aero, bio and energy sectors are just the latest illustration of the rewards Oklahoma City offers those looking for an opportunity to thrive. Join us and put this unique spirit to work for you in Oklahoma City.
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