Nathaniel Harding | Spotting the Potential for Explosive Growth
Nathaniel Harding saw a gap in the venture capital world and has rushed to fill it. As he puts it:
“There’s a lot of opportunity with startups happening and a lot of innovation in various sectors enabled by technology in different forms. But there’s not enough organized capital investing in it. So you’re really seeing a supply and demand mismatch.”
Through his work at recently launched VC firm Cortado Ventures, he seeks to invest in the top tech startups in the region, in industries like energy, fintech, insurtech, aerospace, and more. He’s looking for technology that’s solving problems in the marketplace and has a use case in Oklahoma.
He talks about that in detail and also explains his experiences as founder and president of Oklahoma City-based Antioch Energy, community and business leader, and Air Force captain led him to develop a series of best practices related to entrepreneurship, business development, mergers and acquisitions, seeking funding for new ventures, and more.
Tune in to find out…
- How his military experience shaped his leadership strategy
- Key factors he looks for in companies when investing venture capital
- The difference of small business versus venture investment
- What technology will allow the next generation of entrepreneurs to achieve
- And more
Listen now…
Mentioned in this episode:
Transcript
Rick Hadrava: Hi guys. It’s Rick Hadrava with another episode of the Over 50 Entrepreneur Podcast. You know, when I read today’s guest bio, I was both blown away by this young man’s accomplishments and quickly reminded of the fact that I am definitely in the category of late bloomer. He’s the president of Antioch Energy. He and his partner have developed a mid continental resource play, which they sold in 2013 for 120 million dollars. He’s a decorated Air Force captain and veteran of Afghanistan, where he was embedded with the US NATO headquarters. in collaboration with the Afghan government.
And he’s managing partner at Cortado Ventures. I’m telling you, I’m scratching the surface with this intro today. Easily way, maybe a better way to describe it as before 30, this guy was selected to the 40 Under 40 Outstanding Achievement List three separate times. So I’m very honored, you guys that have listened for any time, I don’t like to do long intros. I’m honored to have Nathaniel Harding with us today. Let’s just welcome him to the show right now, Nathaniel, thanks so much for taking the time to be on our call.
Nathaniel Harding: Well, thanks, Rick. Thanks for having me. And good thing you can’t see me because I’m blushing right now.
Rick: Well, I think you’ve got a lot to be proud of, and I for one, as a former Oklahoma National Guard member, I really want to say thank you for your service, first and foremost. And let’s start right there, Nathaniel, what pointed you in the direction of the military in the first place?
Nathaniel: Yeah. So I think, you know, growing up, I always just saw the value of that service, and military service was an important value in my family. And so the opportunity that I had after graduating college was to go to officer training school. I really jumped at it. That was something that I’ve been working on for years. And I was fortunate to get into the class that I did after graduating college and didn’t look back. Went straight through and became a Second Lieutenant when I was 26 years old. And that was a great experience.
Rick: Fantastic. And I’m just curious, anything that you took away from your time in the military that has kind of launched that this career path that you’ve been on?
Military Experience and Business
Nathaniel: I say, without experience, there’s the diversity of people that I worked with, but also just the leadership training that the Air Force had was beyond any other experience I’d had, and really just the expectations and high standards for yourself and people around you.
But there’s still to this day, there are times that I’ll look back at different things that I learned as far as, you know, tactics or strategy or digital leadership and organizational leadership, things that I learned that I continue, something we call situational leadership. And there is no kind of one size fits all, but to recognize what kind of leadership the situation calls for. And that adaptability is, I think, really key in business.
Rick: Absolutely. Is there an experience in that, it’s an interesting concept that you bring up, is there an experience that you would be willing to share that kind of brings up, encapsulates that point?
Nathaniel: I think, and some just kind of interactions with people that I work with, understanding where they are in their professional development. Understanding that we actually had, you know, a young engineer that joined us as an intern and then, you know, really developed into an outstanding engineer in his own right and was with us for a number of years.
And that journey of going from, you know, somebody who’s really just learning the ropes to somebody who now needs less supervision to somebody who is now able to really like develop their own work products and guide their own schedule and kind of recognize those different phases and trying to adapt, I think is something that I picked up from the military training.
Rick: It’s a good point, because I think so many times, at least in the past, you know, as businesses, we’ve tried to put everybody in a box and training and development was all the same one size fits all. And I think it’s a good point. I’m glad you brought that up. Well, so you did your military service, you came back home, and just walk us through like, did you immediately hit the ground going Okay, I’m ready to go? Did you take some time? How did this path develop for you?
Nathaniel: I was fortunate to be able to, I was in the Air National Guard, initially, and then I was in the Air Force reserves. So that whole time I was also still working my civilian job. I was deployed in Afghanistan in 2012. And that was my, that year was time away from home and that was my active duty time.
And, but really, coming back home, that was, that coincided with the timing of when we sold our assets in western Oklahoma about a year after I got back home. And that was a bit of a turning point. Not a bit, it was the turning point to everything that came after. And because it really kind of closed the chapter on what we had done with the family business and then what we did thereafter on starting our own business where we are now.
Rick: Okay, so let’s not brush over that. So you were, you had a career, self-employed before you went to Afghanistan. And you say family business. So was that a business that your family was already in and you were a part of? Or is it something you started?
Nathaniel: That’s a good question. So the business that I, after working for a company in Denver, shortly after graduating, I came back home to Oklahoma in 09 and then joined the family business, which was called Harding and Shelton, and then transformed that business into more of a technology-enabled and, you know, turn it from being kind of a traditional, you know, vertical marginal wells into the horizontal resource play where essentially we were using horizontal technology and modernizing the company. And so, I took over operations of the business in 2010.
And that’s when we aggressively pursued our most active time in history and became a company that was developing the oil and gas assets with horizontal technology. And that put us into a position to where we were a great acquisition target. And so that’s when we sold in 2013, which allowed our founding generation, my father, to retire, and then allowed me and my colleague to then start our own business that was self-funded. And that was in 2014 when my partner Kevin Donington and I started our own business.
Rick: So the next question that comes to my mind, Nathaniel, is what was the catalyst for you to make the decision that yeah, I think we should sell? You know, because you talked about, was this something where the family members were ready to get out? Or was this something that you looked at and said, I’m not sure I want to do this? We have an opportunity to sell, allow us to kind of free ourselves up and go do something new?
Nathaniel: It was more of a kicking and screaming type environment. As far as, you know, there was no desire to sell. So going back to, I think it’s around 2011, I, actually in 2010, really looked at, you know, we need to either scale and bring in outside capital, or, you know, we should look at selling because, you know, it seemed like a good market to do that. So for two years actually, I worked on trying to bring in outside capital. And we hired somebody to do that full time and we had, you know, a lot of different conversations with different kinds of capital providers, but nothing really made sense for us, both just financially and culturally.
You know, when you have a business that’s still owned by the founder, it’s difficult to kind of pivot from being a bootstrap company to being a using private equity capital or institutional investment. And so around the same time now about 2011 and 12, it was pretty clear that what we were doing was highly valued by the market. So then it pivoted to, I then saw somebody to help us put it out on the market, which was, ended up being a two-year process.
It’s not like selling something on Craigslist. It kicked off a two-year process and we really, frankly sold at a high point. You know, the metrics that we got was just about higher than anything else that had happened for years in that area, and have been the greatest transformational situation for us. One of those times where you look back and say, Man, I’m really glad we did that at that time. Good timing for us, better to be lucky than smart. But that was, so it started off as kind of a different path ended up being apparent that the best path was to sell.
Rick: And it’s great to observe that because I think, unfortunately, a lot of times, especially family businesses, sometimes they miss that writing on the wall for lack of a better word, that window where it is time to sell. I appreciate you sharing that with us. So once you got through that, did you immediately go into Antioch Energy? Or how did that transformation happen for you?
Nathaniel: Yes, so and, we closed that transaction at the end of 13. And then started, we had already started working on starting our next company. So Kevin and I started our own company at the time was just called Harding and Shelton Exploration because we wanted to borrow the same name as the family business for legacy reasons and familiarity. So 2014 started Harding and Shelton Exploration which was just funded by me and Kevin, and we own some assets in western Oklahoma that, they were assets that were excluded from the sale to the third party. And so Kevin and I bought out these kind of what was left over.
And then pursued actually an exploration project in Michigan. And it frankly, didn’t work out. You know, as we know in oil and gas, you know, you’re not gonna bet 1000. You’d be lucky about 500, you know, but we used a novel approach and a new technology that hadn’t been used yet. We were successful in being the first to actually produce oil in the area that we were in, but non-commercial quantities. And so that was, you know, a lesson for us and a moment for us to kind of decide what was next.
And so then, we actually found an opportunity in our own backyard in eastern Oklahoma. And this is now around late 2015. Saw that the next opportunity for us was in our own backyard and found an opportunity to get that funded with private equity. And so went to go look so they’ll fundraise with different partners and private equity and found the outfitter out of Houston, outfitter energy capital, and we then became Antioch Energy upon getting funded at the end of 2016.
Rick: Okay, well, congratulations. Wow. All of that and still under 40, right?
Nathaniel: Yeah. Well, I may be ahead of my time on gray hairs.
Rick: That’s all right. But, you know, we got it right? So it’s very interesting. But let’s switch gears now because you are also into this Cortado Ventures, I want to make sure I say that right. And you’re looking to back entrepreneurs who are driving innovation for Oklahoma’s future with this initiative. Tell me a little bit, tell our audience a little bit what that is and why that’s important to you.
Funding Innovation for Oklahoma’s Future
Nathaniel: Sure. So from a business standpoint, first and foremost, we just saw an opportunity where there is not, there’s a lot of opportunity with startups happening and a lot of innovation in various sectors that are all enabled by technology in different forms. But there’s not enough capital, organized capital investing in it. And so we’re really just kind of seeing a supply and demand mismatch. In fact, Pitchbook did a study late last year and found that Oklahoma is the fourth-least funded area in the country for startups in this space.
And so for one, there’s an opportunity, you know, to make money, frankly, on investing in tech startups, In the area, early-stage tech startups, but also we’ve just seen an environment where there’s more starts happening now than ever. And so we wanted to put together a venture capital fund that will help us, you know, evaluate hundreds of deals over the course of, you know, the fund, and then invest in the top companies in the region.
Rick: Interesting. I know this kind of goes in with your love of STEM and some of the work that you’re doing out there. But you’re specifically looking at certain types of industries if I’m not mistaken.
Nathaniel: That’s right. Yeah, we look at sectors that really make a lot of sense in Oklahoma. And so some of them have more of a historic string, so there’s are emerging. So for instance, energy tech, agriculture, weather, but also fintech and inshore tech are some of the ones that we looked at. Aerospace is obviously a really strong area in Oklahoma.
So it’s important to us that the technology that’s being where that’s solving problems in the marketplace has a strong market and has, you know, a use case in Oklahoma. And it has, frankly, the intended consequence of helping to develop other verticals, other sectors in Oklahoma. You know, obviously, as a born and bred Okie, I have motivation to see our economy thrive and, you know, diverse different sectors and to have these future-ready tech jobs. And so, you know, for me, it was kind of a win-win-win.
Rick: So a couple questions. One, you know, I recently had a conversation with Sean Copeland about this and, you know, I think we’ve got an opportunity in Oklahoma to go out and get some of these workers that can work anywhere. You know, I think one of the things we’ve learned through this recent time is people are mobile and we offer one heck of a quality of life comparison to some other parts of the country.
And Sean’s comment to me was, you know, the problem has been we are energy and we are aerospace, and new ventures don’t always want to come here without the infrastructure. And it sounds like some of this work that you’re doing is kind of that seed work to change that a little bit.
Nathaniel: Exactly. Yeah. If you have, you know, we want to see these companies grow here. And there’s obviously, it’s a good idea to recruit companies that are already, you know, more developed and have, you know, they have a strong financial footing and have a lot of employees. But it’s also, I think, really important to grow our own companies here and have them stay here because if they can get funded here, then it makes a lot of sense for them to stay.
Rick: So let’s take advantage of this opportunity and let’s talk a little bit, just a couple of questions I have on the whole venture capital idea first as bootstrapping. You know, because a lot of people might listen to this and go, Oh, gosh, I’m gonna reach out to Nathaniel. I’ve got a great idea. But where’s the, where’s that litmus test for you on what makes a good candidate for a venture capital type deal versus somebody that truly needs to bootstrap and get themselves to a certain position?
Spotting Potential for Explosive Growth
Nathaniel: Sure. So we look at early stage, which just have a kind of a technical definition, but the way I look at it is, you know, when you’re ready to take your idea from moonlighting and working in your garage to getting an office and hiring your first few people, you know, that’s the earlier stage that we look at. That might even be pre-revenue. You know, you have a minimum viable product, you have a widget that works and on some level, you might have beta users that are referring other customers. You know, that’s obviously an early sign of you’re onto something.
Always, you know, series A and think of a series A round as you have paying customers, you have monthly recurring revenue that’s growing, you’re well past your beta product. But now you’re ready to hire your sales team and lease a second floor of your office and become more of a regional or more dominant player in your local market. And so that’s what we look at, in kind of the pre-seed in series A. So that sets the stage and then for technology, we really want to see, you know, disruptive technology, and people use that a lot.
And that means that’s a pretty big catch-all for a lot of things, but I like to break it down this way because if you do it right, then you’re looking at the opportunity for tremendous growth. And that’s what we want. We want ideas that have potential for a 10 x on the capital invested. So the example I give is of a small business versus a venture idea is. A small business might be somebody who sells sweaters, and they could make, you know, they could make a good living doing that maybe and they could franchise it and they could do all kinds of things to grow that business. But that’s not what we’re talking about.
Our example would be somebody who invents synthetic wool. You know, and now, every sweater seller in the world is going to buy their, you know, synthetic wool from this one person because they now have a monopoly on the intellectual property on how to make cheap synthetic wool. So that’s a concrete example of the difference between, you know, a small business versus a venture investment that has a disruptive technology and the potential for explosive growth.
Rick: Makes a lot of sense to me. And I just think it’s interesting, but it sounds like there’s a little proof of concept in there. And you guys vet it out, but you also encourage. Like I said, I go back to the STEM. I know you do a lot of stuff in education, your a trustee on several things for these organizations. And it really sounds like education is something that you guys, and I’m looking at the list of your team members here and I’m familiar with them. You’ve got some pretty bright minds. So you really have an opportunity to advocate for small business whether, regardless of the innovation or not, correct?
Nathaniel: That’s right. Yeah. I mean, I’ve served on a number of boards that relate to economic development education. So in kind of the way I look at it as if somebody brings me an idea that doesn’t fit our focused criteria, that doesn’t mean that I can’t help. And so with the network that I have and as well as our partners, we can oftentimes, in fact, there’s actually been a case where this has already happened, even though we’re only three weeks old, where we gave our frank feedback about why it didn’t check all of our boxes, but then said, I’ve introduced this entrepreneur to a couple of resources that I thought could be helpful to him.
And it turns out, it was very helpful and he’s now closing on his round that we’re going to be part of. So not only, you could say that I was doing it altruistically because I was hoping somebody who had a problem, but also doing it selfishly because them solving that problem made it an investable opportunity for us.
Rick: And that’s the great thing about the entrepreneurial community is it really is about connections. And even if, like you said, you know, maybe that situation wasn’t the right fit for you guys, but you have a connection that you can make and that can change somebody’s trajectory in a heartbeat. And so I really love that. So Nathaniel, here’s what I’m curious about. What’s the future look like? What’s got you excited 10 years down the road as you look out here and see what’s in front of you?
Exciting Future Developments
Nathaniel: I guess, you know, I think, in general, you’re seeing a lot of people like, question certain assumptions, right? So a lot of us couldn’t have imagined the world now versus three months ago. So imagine you’re 10 years from now. But in times like this, I think you see a lot of people and a lot of organizations throw off assumptions about how things are supposed to work. And that’s one of the reasons that we see opportunity because you now have a whole new playing field for innovation.
You know, whereas before somebody would have said, Well, you can’t do that because that’s not it’s done. Now, they just throw up their hands and is like, Well, what do I know? You know, I mean, anything’s possible now. And so I think that you’re going to see a lot of, as technology applications start to pervade more and more sectors, you’re going to see just a whole new generation of development. And now you have literally a new generation of entrepreneurs, that that’s how they grew up, where they don’t even have those kind of baked-in assumptions about how it was supposed to work.
All they know is kind of a tech-enabled world. And I’m really excited about that. Just talking about this fun thing like self-driving cars, and, you know, what else we’re going to have. And so I think we’re going to see a lot of, I think this decade in particular is going to be just, the end of it’s going to be totally unrecognizable from what we saw even just a few years ago. And I think you also have, I mean, I think of how Oklahoma’s economy is being impacted and how we can no longer rely on kind of recruiting the next oil and gas company to help bolster our economy.
And so you’re seeing that play out. That’s not unique for Oklahoma. That may be a unique example, but that kind of dynamic is happening throughout the world. And so you’re seeing a lot of local and regional economies accelerate what may have been a 20-year plan to a two-year plan on how are we going to diversify and grow our economy, more and more of a service economy with more and more distinct delivery options that we see. And I think that’s going to play out in an accelerated way.
Rick: I totally agree with you and, you know, I joke the older you get, the more you realize you really don’t know anything. And I think part of that’s because all the change, right? Everything’s being disrupted. Which leads me to a question I’d be curious to get your thoughts on because we talk about young people who have known nothing but technology. But what do you think, what are your thoughts around, you know, a 50 or 60-year-old person?
You know, we talk about second-half entrepreneurs on the show. How do they engage, you know, let’s say they’re leaving corporate or they’ve, you know, been downsized or whatever and they want to go try an entrepreneurial venture. Any advice or any experience that you’ve had that you could share your thoughts on that?
There’s No Substitute for the School of Hard Knocks
Nathaniel: Yeah, I think, what’s the saying, like youth is wasted on the young. You know, there’s a lot of things that experience brings that there’s no substitute for. And a lot of times when you do have, you know, a younger entrepreneur, there’s a lot of frustration over, you know, there’s questions from investors on whether this person has the experience to know what it’s like to grow a company.
And so I think, you know, as I kind of look at different entrepreneurs of all different backgrounds, I think one thing that is universally true is that, you know, the experience of having a career, maybe a few different careers in different areas. There’s just no substitute for that no matter how many books you read, or self-help seminars you go to, there’s just no substitute for the school of hard knocks, right?
Rick: I was gonna say, there’s no substitute for being, for failing a few times and maybe a punch in the nose once in a while.
Nathaniel: That’s right. And I think, and I’m actually glad you phrased it that way because one of the things that people ask sometimes, like, what do you look for, if you’re doing early-stage investment, that means that a lot of what you are investing in is the entrepreneur. And so how do you evaluate that? Well, one of the things that we look for is grit and creativity. And actually go a little bit back to kind of the military conversation earlier, is that one of the things they teach you is you have to have a plan, but what’s going to happen is not going to be the plan. Everybody has a plan until they get punched in the face.
So, you know, and I think, but you, you know, you have to have a plan, but just know that it’s not going to play out. And then how are you going to react? And so that grit and creativity is what separates an entrepreneur from somebody who, you know, conjugates and thinks about what it might be like to do something. And you don’t, you can’t measure that until you’ve actually seen how somebody has reacted to that. So I think that’s absolutely something that should be appreciated and valued in that entrepreneurship.
Rick: And I appreciate you doing that and talking about that because, you know, the two things that I think of almost like a bell bar approach, if you’re young and you have an idea, don’t be afraid to go out and try it, right? Because the experience you’re going to gain is going to be incredible. If you’re older and you’ve been in an environment where maybe you’ve not been an entrepreneur, or maybe you have and just had failure, now is the greatest time, regardless of your age, I believe, with all the disruption comes so much opportunity.
That’s one of the things the purpose of the show and the work we do is to encourage everybody, you know, to just go out there and do that. That’s where a lot of this great stuff is gonna take shape. So Nathaniel, man, I really, really am grateful to have you on the show today. We’re coming towards the end of our time, believe it or not. I feel like we could go much longer on this. I have a bunch of questions. But if somebody wants to learn more about your work or maybe reach out to you, what’s the best way for somebody to do that?
Nathaniel: Yeah, I think, you know, I’m very available, very present on social media. Our website for Cortado Ventures is just cortado.ventures. And from there, you can get ahold of anybody on our team. But I’m also, you know, find me on LinkedIn. And I think those are great ways to connect. And certainly, I mean, every day we’re meeting more people in the investor community and the entrepreneurship community.
Rick: Very good. Well, any parting thoughts that you would like to share with our audience before we wrap up today?
Nathaniel: Well, it’s probably because I am watching the series now, I’m behind the times, I’m watching Madman, finally. And there’s a quote that kind of stuck with me where they say, This is America. Think of what you want to do and become the person who does that. And what that was from, you know, I think that a lot and that’s, you know, it’s kind of a quick way for me to be like, yeah, you know, there’s balance opportunity.
And you’re always just a network away from diving in to the next idea, you know? And having the life experience and knowing what it’s like to learn something organically is how you can now use it to accelerate your next adventure. And I think just when I look at it that way and have that kind of growth mindset, it gives me encouragement energy to go to the next thing.
Rick: Absolutely. And I appreciate that because it gives me a whole lot of thought as well. Well, listen, we’ve come to the end of the show. Hang out with me for just a minute. We’ll wrap things and then you and I can talk but, guys, you’ve been listening to the Over 50 Entrepreneur Podcast. You can be sure to get all our show notes.
This information from today’s show with the links to the information Nathaniel talked about, you can do that by going to www.epicsbiz.com/podcast. That’s epicsbiz.com/podcast. And be sure to shoot me an email at rick@epicsbiz.com. Let me know what you think. Any input. Tell me you liked the show, whatever we’d love to hear from you. And until next time, remember, we’re only getting started.