North Dakota’s Wonder Fund announces new investments

North Dakota’s Wonder Fund announces new investment

North Dakota’s Wonder Fund announces new investments

North Dakota’s Wonder Fund announces new investment

April 26, 2024
It’s been nearly a year since North Dakota’s Wonder Fund has announced any investments, but the program has been anything but dormant since last May.

It’s been nearly a year since North Dakota’s Wonder Fund has announced any investments, but the program has been anything but dormant since last May, when the energy and utilities asset-maintenance technology startup Thread was named as the second recipient of the fund’s backing.

The North Dakota Commerce Department this week announced the Wonder Fund’s latest round of investments, totaling an additional $3.75 million across three companies, including a major follow-on investment into Thread of $2.5 million, bringing the Wonder Fund’s total investment into the Grand Forks-based company to $5 million.

The Wonder Fund is a coffer of $45 million allocated to North Dakota by the U.S. Treasury Department’s State Small Business Credit Initiative. It is under the direction of O’Leary Ventures, a private equity firm founded by famed investor Kevin O’Leary.

O’Leary Ventures CEO Paul Palandjian says the targets of the investments are early stage companies that are either North Dakota-based or founded, or that promise to provide critical programs, services and impact in the state.

Besides Thread, two other companies were included in the most recent round of Wonder Fund investments.

Tavolo, a Minneapolis-based, AI-driven marketing platform for restaurants founded by Fargo native Taranvir Johal received a $250,000 investment, and $1 million was invested into Drut, a technology firm based outside of Boston. Drut has identified North Dakota as a prime region for its AI data center solutions, which focus on decentralizing storage and data centers to create efficiencies for companies.

The Wonder Fund previously announced that it was backing Land Trust, a Montana-based company that opened a Fargo office last year.

The SSBCI award is allocated to the state in three tranches of $15 million, according to Palandjian. While only half of the first investment tranche has been publicly disclosed so far by the Wonder Fund, there have been additional investments which the state has not officially announced.

In March, the livestock management technology firm HerdDogg announced it had received an investment from the Wonder Fund upon completion of a financing round.

“We’re proud to invest in HerdDogg as it expands in North Dakota,” O’Leary said in a release from the company. “The company will bring technology and other high-value jobs to the state while assisting cattle producers worldwide, reduce operational costs, and increase profitability.”

Palandjian told The Forum the first year-plus leading the Wonder Fund’s efforts to create economic impact for North Dakota has been “a thrill.”

He said he spent over 60 days in North Dakota in 2023 working to secure Wonder Fund investments and that the OLV team was able to combat and overcome some early misperceptions about North Dakota within the larger investment community, thanks in part to the state’s Commerce Department staff.

“I’ve seen commerce departments in other states function as more like an emblem for the state but not actually a working department. These guys in North Dakota, they roll up their sleeves, they work, they try to help companies in ways that I just haven’t seen. And so we try to integrate that kind of ethic into how we think about the investing,” he said.

Palandjian said Wonder Fund will have a portfolio of about 20 companies once the full $45 million is invested.

“Four to six of them that might be in the $500,000 to $1 million range — the smaller, earlier-stage companies where we’re coming in when some of the other seed investors from the ecosystem are,” he said. “And then we’re going to have some larger, anchor investments that are more advanced and have compelling economic underpinnings for which we think the returns are quite good.”

Palandjian said Thread was a good example of the latter category and of how the Wonder Fund not only invests in the companies but also continues to act as a support system and champion, using OLV’s connections to pitch them to wider audiences.

“Our network is not just a national network — it’s also international because Kevin (O’Leary) is a respected global name,” Palandjian said. “Thread has many potential customers in its roadmap that are from oil and gas nations, so by virtue of our ability to have access to leadership in European and Middle Eastern countries, we will be able to promote the adoption of Thread’s technology to end users in those countries.”

Thread’s software is intended to help energy and utility companies efficiently track, inspect, and protect their physical infrastructure and assets through data and automation. Otter Tail Power is a Thread customer, using the technology to make wind turbine inspections more cost-effective and increase the life span of its turbine blades.

The range of Wonder Fund investments so far has been $250,000 to $5 million, but Palandjian said the “sweet spot” is about $2.5 million.

“At the rate we’re going, there is a scenario in which (the full $45 million) is fully invested by mid-2025,” Palandjian told The Forum. “What you’ll see over the next couple of months is a series of investments that will catch you up with where the program is today.”

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