It is a Long Lane that Never Turns – Agtech Angel Investing 100 Years Ago

100 years ago my great grandparents were also angel investors – in Infrastructure, Media and Bee tech

They invested in media, ag / cleantech, and infrastructure.  Lest you think angel investing is new or VCs are smart – it really hasn’t changed much in a century.
In the 1920s my great grandparents were active angel investors in the Rio Grande Valley of Texas. The portfolio, that I know of, included a newspaper, a yacht club, a toll bridge over the Rio Grande, and a Bee business, called Ault Bee Co. I’ve actually got the “offering memorandum” for the follow-on into Ault Bee.  As you’ll see, not much has actually changed in the venture business in 100 years.  Take a read, and see if you’d have written the check!  Ault Bee appears to have been my great grandmother’s deal (or maybe she just handled all the money!)   Ok, maybe that’s changed, not many women venture investors these days.
The deal:
Ault Bee provided queens and bees to the local and North American market from south Texas by catalog sales.  The company had patented technology, including IP on cage designs to help keep bees alive during transit (a major yield issue as this was back before the refrigerated bee shipping of today).
Each Shareholder was asked to put up 3% of their original investment for a 10% short term 6-month bridge note to be paid back out of revenues from growth, with 10% attorney’s fees if sent to collection.
The deal timeline would impress anyone, and was all handled over the mail in <3 weeks to close after a meeting, presumably of shareholders or the board.
  • Oct 8th shareholder letter goes out
  • Oct 21st note paid that check sent
  • Funds receipt dated Oct 25th.
  • November 1st Promissory Note returned – deal closed.
 Legal was all handled on a promissory note taking less than half a page – sounds a hell of a lot better than a big Series A legal bill.
The offering memorandum itself totaled 2 pages. 1-page letter detailing the offering terms, and 1-page business summary and financials. Curiously, the income statement and detailed forecasts were left out, and the balance sheet is not in a typical GAAP format for today, how many times have we seen one of our startups do that!
The pitch is strikingly familiar, and includes almost everything you’d expect in a deal today:
A great call to action – it is a long lane that never turns, hinting at the same pivot issues our startups deal with today.
Use of funds: fund opex and capital to serve international and channel growth
Reason for the need – poor performance due to weather, timing, inability to serve orders etc.
A major growing channel – Montgomery Ward which they needed capital to serve. Montgomery Ward in 1926 would have been the equivalent of Tesla’s new Home Depot partnership announced this week, or a startup closing its Walmart or Amazon deal.
A pivot to a new international growth market – Canada, and need to move production to stem losses caused by environmental issues.
A note that opex had already been cut, and the founding CEO highlighting that he was working for less than market.
A call to investors for help recruiting top talent.
Her $500 original investment is about $7K in today’s dollars, out of a $70,000 round, which equates to about $1 mm in today’s dollars. But in 1924 average earnings were about $1,300, vs $50K today, and a model T cost $290. So they were investing about the equivalent of $20-$50,000 on that basis in relative terms.  This is not too far off the size and typical investment for 10-25K/person angel round today. She would have had a little less than 1% of the company’s equity. The company appears to have spent – c 6 years in – about 5% of its capital base on IP and 64% on capital equipment – not too far off numbers you might see today.
Even the topic is not dated – ag tech is a hot thing again, and bee hive losses have been in the news for several years as a major problem statement. One of the Ault Bee patent was even cited as recently as a 2013 patent on bee hive design!
In 2017 a small startup actually secured a small A round after a few hundred thousands in grants, to build decision support software to stem bee hive losses.
It is fascinating to me how little the venture business – supposedly invented in the last few decades – has actually changed. As for the portfolio returns – the data is lost to history, but my uncle recalls that the toll bridge and yacht club made good money (and both are still there 100 years later), Ault Bee and the newspaper did not. In fact, my grandparents acquired the newspaper CEO’s personal library as partial compensation for their investment in that business. But a 50% 100 year survival rate would not be bad. Interesting that media and “tech” deals did poorly, but the two infrastructure ones lasted a century.
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