Tech Coast Angels’ (TCA) ACE Fund II has announced a highly successful exit that was described as unique in three ways:
- the time to exit was very short (two years)
- the exit had a very high return (7.8x)
- the company was based in the heart of flyover country: Oklahoma.
Most of the innovation and entrepreneurial activity takes place on the East and West Coasts. These regions benefit from a robust ecosystem of incubators, like-minded individuals and loads of money. Unicorns abound–from Seattle to San Diego, from Boston to the Bay. Both coasts are where a disproportionate amount of risk capital, such as Angel and pre-seed investing, goes into small businesses and startups.
But flyover states also have terrific small businesses very worthy of private investment, according to Tech Coast Angels. Promising companies and great deals can be found anywhere, says Dave Berkus and Raymond Chan, active investors in TCA’s ACE Fund.
Berkus, a “Superangel”, met with the founders of WeGoLook during a trip to Oklahoma to deliver a keynote speech at the invitation of the Oklahoma Angels and Oklahoma’s venture fund, I2e. He was asked by the venture fund to review five companies, and within ten minutes of his meeting with WeGoLook’s founders, he apparently state;
“I want to invest.”
The founders told him they were already fully invested and had closed the round. But by the end of the day, WeGoLook’s founders liked what they heard from Berkus, and re-opened the round to accept another $100,000 investment from Tech Coast Angels’ ACE Fund II. Within a year, the angel network had more than doubled its investment in the company.
WeGoLook is a platform or value exchange that connects individuals and companies with on-demand investigators or “lookers” to inspect or verify conditions in remote or inconvenient locations. Some examples are property inspections, auction item verifications, and notary services.
One major insurance company now uses WeGoLook’s agents for accidents in areas far from a claims department.
Because investment opportunities between the east and west coasts are few and far between, WeGoLook had a very low pre-money valuation. In just over two years, the company was sold for over $42.5 million, and TCA’s ACE Fund II members received a 7.8x return on their over $200,000 investment.
“WeGoLook’s platform struck me as being so different and on target,” said Berkus. “The attraction was so obvious; undervalued and yet very attractive. On the West Coast, this kind of deal would have been prevalued so much higher, and the exit would have taken so much longer.”
Chan, managing partner of TCA’s ACE Fund I, II and III, says this is all too common.
“Due to pressure and expectations for every startup to be the next ‘unicorn,’ for both a company and its investors to hold out for a longer time to offset a higher purchase price. Entrepreneurs and private investors in flyover states don’t have the need—or the huge pressure—to have to hit a home run every time; they are satisfied with a base hit. And that means quicker exits for angel investors. Although one of our tenets in the ACE Fund is that we prefer deals that are quick to return, WeGoLook is very rare,” continued Berkus. “Most angel investments take years. Seven years is what’s considered an average amount of time to achieve liquidity. WeGoLook had an extremely successful exit in an extremely short period of time – just over two years.”
Tech Coast Angels (TCA) is one of the largest and most active angel investor networks in the US. TCA members are accredited investors who collectively invest in startup companies in the range of $250k to $2M as a group.