The angel investor group known as The Fund for Arkansas’ Future, or FAF, announced Wednesday that it had exited from Apptegy Inc. of Little Rock and closed the fund.
The group, which was one of the first to invest in the education technology firm, said in a news release that it dispersed $3 million to its members, a “high multiple” of their initial investment in the company.
The group did immediately respond to questions about the exit.
The exit comes less than a month after Apptegy, one of the fastest growing private companies in the country, announced the departure of its founder and CEO, Jeston George. Apptegy said the decision for George to step down was mutual.
George, who started Apptegy in 2015, was set to retain a large ownership stake in the company but have no role in its operations moving forward.
The majority of the company’s shares are held by private investment firm JMI Equity of Baltimore and software-focused private equity firm Five Elms Capital of Kansas City, Missouri. Five Elms operating partner Bob Butler was named interim CEO.
FAF was started by Mary Good, John Steuri and James Hendren. The executive director of the fund was Jeff Stinson, director of HealthTech Arkansas of Little Rock. Stinson and Hendren are also organizers of the Central Arkansas Angel Network, which launched in 2020.
In a statement, FAF said it invested $6 million from 57 investors in 18 tech-based startups from 2005-2012. The group said a second fund it launched in 2013 raised about $5.5 million, a portion of which powered growth at Apptegy.
Via phone Thursday, Hendren told Arkansas Business that FAF had been looking for an opportunity to exit for “several years.” Hendren said Apptegy purchased FAF’s shares, which were then transferred to JMI Equity and Five Elms Capital.
“When the opportunity came up, they let all of the early investors know that this opportunity is there if we wanted to be included in the negotiations,” Hendren said. “[JMI and Five Elms] don’t own everything, there are still some insiders and some investors that own shares, but the accurate statement is that [the two VC firms] own the vast majority.”
Once a two-person startup, Apptegy now employs about 400 workers and is looking to hire another 300 over the next few years.
“Although FAF is no longer making investments,” the group said in the release, “its pioneering work has led to a number of other significant Arkansas-focused angel funds.”
Hendren said there are no plans to open a new FAF fund, but “there are a couple of other deals going on in central Arkansas.”
“I think it is safe to say there is intention for further funds,” he said. “They won’t be the same organization, through FAF, but a number of people involved in that are involved in other funds that are being worked on.”
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