A financial milestone for an Oklahoma venture capital firm could eventually have a ripple effect in Northwest Arkansas.
Cortado Ventures is starting the final close of its oversubscribed $80 million seed Fund II. The funding close will bring the Oklahoma City-based firm’s total assets under management (AUM) to over $110 million in less than three years.
Cortado Ventures’ Fund I, which closed in 2021 and raised $20 million, has invested in nearly 30 companies, focusing on energy and logistics, life sciences and the future of work. That culminated in more than $700 million in enterprise value and created over 100 high-paying technology jobs.
One of those companies was Bentonville software provider Ox, led by founder and CEO Charu Thomas. The company, which provides an AI-powered technology platform for frontline operations, announced a $12.6 million Series A funding round in April. BBG Ventures and MaC Venture Capital co-led the oversubscribed round.
Several existing investors also participated, including Cortado Ventures.
“Charu is wildly talented and intelligent and surrounds herself with equally impressive people,” Cortado Ventures managing partner Nathaniel Harding told the Northwest Arkansas Business Journal. “They are doing something really novel and technically difficult, but their ability to execute is really rare. It’s a great regional story and exactly the kind of thesis we like to underwrite as investors.”
Cortado Ventures is one of the region’s most active seed investors and is hyper-focused on early-stage companies in the mid-south, defined as Oklahoma, Texas, Arkansas, Missouri, Colorado, Kansas and New Mexico. It is the largest venture capital firm of its kind in Oklahoma, referring to a traditionally structured VC firm with all minority limited partners.
An Oklahoma native, Harding is a successful investor in energy, biotech and ag tech. He is a third-generation oilman who shifted his family’s legacy to invest in entrepreneurs. Previously, he and his business partner exited their energy company for $120 million.
Harding is a Kauffman Fellow, a decorated Air Force captain and chairman of Oklahoma’s Council on Workforce and Economic Development.
Harding believes the fact that Cortado Ventures’ second fund is four times larger than its first reflects a maturing startup ecosystem. He also attributed the growth to the first fund’s success.
“It is difficult to raise capital for anybody right now,” he said. “But the ability to show that there is success and the reason why, that’s repeatable and scalable, is resonating. You can repeat it as an investor, and that’s part of a larger growth story.”
Harding said the second fund has many new institutional investors, but it’s driven by Fund I investors re-upping.
“We launched the firm to build next-generation companies that will bring future-ready technology jobs to the region,” he said. “There has been high interest in both Fund I and II creating a momentum that has captured the attention of many throughout Oklahoma, the Midcontinent and beyond.”
In a recent interview at downtown Bentonville’s Ledger office building, Harding said Cortado Ventures has invested in nine new companies from Fund II with a goal of 30. There are founders and entrepreneurs in Northwest Arkansas who stand to benefit.
“One of the reasons we are establishing a permanent presence in Bentonville, and why we are here all the time, is to be closer to the opportunities here,” he said. “A lot of the deal flow and, I speculate, a lot of the future investment will be centered on Northwest Arkansas.”
He said multiple factors make the region attractive for investors.
“You have a perfect mix of quality of life and a business-friendly environment,” he explained. “And there’s a mashup of legacy business and a creative class that is really thriving here. That fertile ground is necessary for a new wave of innovative companies.”