North Dakota Growth Fund a ‘capital multiplier’ for local entrepreneurs

$89 million of $600 million in local Legacy Fund investment rolled out so far

North Dakota Growth Fund a ‘capital multiplier’ for local entrepreneurs
Pavewise’s weather data gathering device GroundTruth in use at a construction site in Bismarck in 2024. Photo provided by Byrce Wuori.

Bismarck-based Bryce Wuori had long seen a need in the road construction industry for better tools to increase efficiency at the on-the-ground crew level.

Software programs had been available for planning an asphalt project, but on-site crews would often just wing it, he said, leading to lost time and lost profit.

Equipment needs, compliance requirements, weather variables, and production targets were often not factored in at that level until problems arose, he said.

“It was always reactive,” Wuori said. “We’ll do something until it works and have to change it.”

In 2017, Wuori and his team began developing a software system that looked at all those variables at the ground level to help crews better manage projects, but which never got a lot of traction.

“I knew we had something that was really cool, but we didn’t know anything about building a software company, what it entails,” he said. “I spent probably a good year banging my head against the wall.”

His idea for what has become the Pavewise software system could have floundered and gone nowhere. Instead, he was able to learn how to build that business, pitch to venture capitalists, and attract investors after going through an entrepreneurship accelerator program in North Dakota hosted by Gener8tor in 2023.

Since that boost forward, the Pavewise management system and the GroundTruth weather data gathering tool have started being used at projects across the state and country.

A helping step up

That boost likely wouldn’t have happened or taken a lot longer if not for participating in the Gener8tor program, he said.

Gener8tor, along with Lewis and Clark Agrifood Fund, Badlands Equity Fund, Longwater Opportunities, and Homegrown Capital Fund are the first cohort of investment vehicles chosen by the local office of Chicago-based 50 South Capital to spearhead investment into North Dakota companies.

These are the seeds of a program planted in 2021 by the state legislature to commit a portion of the state’s Legacy Fund directly to in-state investment.

The idea is that $600 million will go to the program through 2030. So far, $89 million has been committed to those five funds and to four other direct co-investments, with around $44 million fully deployed, according to Kodee Furst, Dickinson-based local director for 50 South Capital.

Besides those fund investments, the Growth Fund has direct co-investments in four companies in the state – Bushel, Edgewood Healthcare, Midland Garage Door and Crusoe Energy Systems, so far.

Of the funds, Lewis and Clark Agrifood has invested in Bushel, Longwater into Midland Garage Door, and Gener8tor into several companies, mostly through the accelerator program.

The initial Gener8tor program is a seven-week intensive experience for founders like Wuori, who meet with over two dozen mentors and around the same number of potential investors, Furst said. Those going to the next phase go through a twelve-week accelerator, get $100,000 and meet with triple the number of mentors and investors.

“That helped us tremendously,” Wuori said. “We found our lead investor, we found other investors. I think back, and if I wouldn’t have gone to the first event, I don’t even know if we’d be a company right now. I don’t think I would have ever figured it out myself.”

So far 14 companies in the state have seen some of those investment dollars directly, while over 30 have been impacted by the Growth Fund through Gener8tor’s programs, Furst said.

There has been some concern among people watching the Legacy Fund about whether these investments will all go to companies in the state.

Furst said that the Growth Fund’s investment policy statement makes clear that all capital put into the program has to go back to North Dakota companies.

“The diligence is disciplined and thorough to put it mildly,” she said.

Furst said the fund is really focused on ag tech, UAS tech, and the energy sector, and what the drivers of the state economy will be going forward.

One focus is also to ensure investments are made across the state, so that they aren’t all going to major cities like Fargo.

“I’m a class B kid from western North Dakota, I know what an oil rig looks like, and so for us what has been impactful is it is not just industry diversification and strategy diversification, but also geographic diversification,” Furst said.

black and orange metal machine on green grass field during daytime
Photo by David Thielen / Unsplash

Capital multiplier

The initial $89 million in commitments by the Growth Fund has led to another $136 million of investments into companies in the state.

“So when we talk about the growth fund being a capital multiplier, that's what that means,” Furst said. “The number I look at the most that I think is, you know, the proof in the pudding, is what have we committed versus capital that's been invested into North Dakota companies.” 

Furst said 50 South Capital’s mandate is twofold – to make money for the state of North Dakota and build the supply chain for the state’s entrepreneurs by activating private markets and access to capital.

Jake Joraanstad, CEO and founder of Bushel, has been another beneficiary of the in-state investment program and also a mentor to other entrepreneurs like Wuori. Bushel has developed agricultural accounting systems for farmers tracking scale tickets and for ag retailers to better track sales by providing accessible, real-time data.

Joraanstad said around 1,000 farms are using his tracking tools and around 100,000 farmers across the country use other management tools the company has created.

“One of the challenges in North Dakota has been this idea of raising capital,” Joraanstad said. “When I first started in 2016, 2017, I had to leave North Dakota to go find where that capital might come from.”

While there were some angel investors in North Dakota there were always gaps in the next level up where millions in investment were potentially needed, he said.

Suhas Narayanaswamy of Lewis and Clark AgriFood (left) in discussion with moderator Jennifer Marston of Ag Funder at a panel on innovations that will impact agribusiness in the future hosted by Bushel in Fargo in June. Patrick Honcoop (right), CEO of Ag-Tech Pro, and Jake Joraanstad (far right) listen in.

“There's always been a gap in North Dakota in that arena, until this Growth Fund, where the ability to write a multi-million dollar check from Lewis and Clark that happens to have North Dakota capital behind it kind of changed the game for us,” Joraanstad said.

While entrepreneurs sometimes need to learn some things the hard way, he said, they shouldn’t have to learn everything the hard way. Building a funding environment like the state has started with the Growth Fund is about adding experience across the board, with both entrepreneurs and investors building upon what they learn to pass along to the next cohort.

“That’s resulted in the biggest flywheel effect for entrepreneurs in our region,” Joraanstad said.

Another entrepreneur who has benefited from the Growth Fund is Grand Forks-based Matt Dunlevy, co-founder of Aethero. Dunlevy, like Wuori, went through Gener8tor’s accelerator program last year and benefited from the access to mentors and investors on how to make the next step up.

Aethero uses drones, or unmanned aerial systems (UAS), to gather data on buildings to measure things like energy efficiency, to check to see if buildings are built to spec, or if older buildings have structural integrity issues, as well as for monitoring energy infrastructure from grids to oil and gas facilities.

“We still thank our lucky stars that we were in that first cohort,” Dunlevy said. “It helped us in terms of syndicating different investors and maturing our company by years, and just understanding what could be down the line if we execute correctly.”

Dunlevy said “it was a boot camp unlike any other I’ve been through when it comes to business,” and that going through the process has been an X factor for the company.

“We wouldn’t be where we are without them and we derive a lot of satisfaction from the successes we’ve partnered with Gener8tor along the way,” Dunlevy said.

The North Dakota News Cooperative is a non-profit news organization providing reliable and independent reporting on issues and events that impact the lives of North Dakotans. The organization increases the public’s access to quality journalism and advances news literacy across the state.