Millions from the Legacy Fund are invested in North Dakota, but the details are a mystery

The $8.5 billion Legacy Fund now is making investments in North Dakota under a law passed in 2021. So far, $62.5 million of an initial allotment of $250 million for equity investments is invested.

North Dakota Legislature
The North Dakota Capitol in Bismarck. Photo illustration by Troy Becker

BISMARCK — Legislators have been clamoring to use the $8.5 billion Legacy Fund as a financial lever to raise North Dakota's economy through investments in the state.

So far, the State Investment Board has funneled $62.5 million from the Legacy Fund into five managed financial funds to target investments that will provide a return to the state and boost business development.

The details of how that money is being put to use, however, largely remain a mystery.

The only information the North Dakota Retirement and Investment Office will disclose — citing a confidentiality law — is the total amount of funds invested and a list of the five funds that will direct the investments.

The North Dakota Legislature acted in 2021 to allow a portion of the burgeoning Legacy Fund, which receives 30% of state petroleum revenues, to be invested in business ventures in the state.


The North Dakota Retirement and Investment Office and 50 South Capital, a Chicago financial services company, will only disclose the names and investment focuses of the five companies that have received Legacy Fund investments, each with a mandate to invest inside the state.

“These investments are private market investments and as such most of the information related to these investments falls within the scope of confidential commercial and financial information” under state law protecting proprietary information and trade secrets, said Jan Murtha, executive director of the North Dakota Retirement and Investment Office.

Because of the law, “We’re able to provide you with aggregate invested and committed amounts by 50 South,” Murtha said. Equity investments made by the program, by their very nature, involve privately held companies, where confidentiality is maintained, she said.

Kodee Furst, a director of 50 South Capital who lives in Dickinson and has an office in Fargo, said investments have been made in North Dakota companies through the North Dakota Growth Fund, a vehicle for investing the Legacy Fund in ventures inside the state.

Of the $62.5 million invested so far by the firm, managing funds have funneled $17 million to businesses based in or with operations in North Dakota, she said.

The recipient funds have invested in several North Dakota portfolio companies to date, including Bushel, Thread, Edgewood Healthcare, RxE2 and Soiltech Wireless, Furst said, although she did not provide specifics.

“We don’t release the individual amounts into any of the specific funds, primarily because it creates a competitive disadvantage,” Furst said. “We don’t want ‘Fund A’ knowing we allocated ‘X amount’ to ‘Fund B.’”

Thread, formerly called Airtonomy, is based in Grand Forks and uses drones for inspections, including power lines and pipelines. It has partnered with the University of North Dakota.


SoilTech Wireless is based in Idaho but has an office in Fargo that is the company’s Midwest hub. It provides soil monitoring services for farmers.

Edgewood Healthcare, based in Grand Forks, provides senior living and assisted living housing around the state.

RxE2, based in Fargo, works with the pharmaceutical industry to provide decentralized clinical trials, making them more accessible to patients.

Also, Furst said, gener8tor, a nationally ranked venture capital fund and accelerator, has selected five companies from across the state that will benefit from what she called “individualized coaching and mentorship to prepare them to raise capital.”

Later this year, gener8tor will invest $100,000 in each of five early-stage North Dakota businesses, she said.

The State Investment Board has committed $100 million of the initial $250 million allocation to the North Dakota Growth Fund, First said. The balance is expected to be committed over the next three to four years when needed.

The investments handled so far by 50 Capital South involve funds that combine investments of their own with contributions from the Legacy Fund to invest. “It multiplies,” said Rep. Glenn Bosch, R-Bismarck. “They’re bringing their own capital to the table, and we’re putting our money on the table along with it. We’re combining it.”

The Legacy and Budget Stabilization Fund Advisory Committee recently approved a framework for direct investments, including buying equity stakes in startup companies.


Now that the rules for direct investments are in place, 50 Capital South will soon be using a portion of the Legacy Fund for those investments, said Bosch, chairman of the Legacy and Budget Stabilization Fund Advisory Committee.

“They are engaged with what would be the first direct investment opportunity,” he said, adding that they will seek a good rate of return.

The direct investments will come out of the $250 million currently available for in-state investing in funds or companies.

Rep. Mike Nathe, R-Bismarck, the leading sponsor of legislation in 2021 to allow the Legacy Fund to be used for investments inside the state, said he is satisfied with the progress so far.

“That $60 million is fairly fast for that industry,” he said. “The vetting process takes a very long time.”

Retirement and Investment Office staff were slow in devising a process for the direct investments, but now a framework is in place, Nathe said.

“RIO has been kind of throwing a monkey wrench into this, but now they’ve got it worked out,” he said.

Greg Tehven, executive director of Emerging Prairie, said creation of the North Dakota Growth Fund helps provide sorely needed venture capital for entrepreneurs in the state.


“It’s critical when you think about business,” he said.

Tehven, who helped 50 Capital South network with entrepreneurs, believes the foundation is being laid for significant investment and business activity.

“I’m optimistic,” he said. “I’m feeling really encouraged.”

50 South Capital, which also manages state growth funds in Illinois and Indiana, will provide quarterly updates to the Legislature on the North Dakota Growth Fund’s portfolio activity through the State Investment Board, the Retirement and Investment Office and the Legacy and Budget Stabilization Fund Advisory Board.

It will take time, however, to report returns, since it takes time for investments in startups to bear fruit, Furst said.

“Private equity is a long game,” she said. “Our job is to make sure the money invested gets back to North Dakota.”

Scott Anderson, chief investment officer for the North Dakota Retirement and Investment Office, said by law the benchmark for Legacy Fund equity investments is to equal the Legacy Fund’s overall five-year performance.

During the most recent five-year period, net of fees, the Legacy Fund earned 5.35%, better than the 4.97% benchmark, he said.


He expects to start seeing quarterly and annual reports from 50 South soon, with aggregate returns for the North Dakota Growth Fund. But he cautioned that it can take years for equity investment to mature and show a return.

Patrick Springer first joined The Forum in 1985. He covers a wide range of subjects including health care, energy and population trends. Email address:
Phone: 701-367-5294
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