Albuquerque Region's Venture Capitalists Funnel $1 Billion Into 100 Entrepreneurial Enterprises
In the early 1990s, there was little or no startup money to be had for entrepreneurs in and around Central New Mexico. What a difference a decade makes.
In recent years, venture-capital financing has come into its own here, providing seed capital to multiple startups.
More than 20 financing-related companies are parceling out or locating dollars. Some act as full partners with new businesses; others serve as brokers connecting the money to the idea, then stepping back.
A pioneering player was Technology Ventures Corp., which was spun out of Lockheed Martin Corp. in 1993 as part of its proposal to manage the U.S. Department of Energy’s Sandia National Laboratories.
The idea was that the spinoff would help fund the commercialization of technology developed in the lab and at research universities.
With 100 new businesses, slightly more than $1 billion in funding and more than 12,000 jobs created, not to mention a host of new players in the field, the idea seems to have been a sound one. “We’re a nonprofit that tries to focus on economic development, entrepreneurs and venture capital,” says Randy Wilson, director of operations. “When we started, there were zero venture-capital firms in New Mexico, and the state had this huge reservoir of technology that was being developed in the labs with potential in the commercial sector. We were faced with the challenge of growing both an entrepreneurial culture that didn’t exist and a venture capital culture that didn’t exist.”
Now the state has been named the No. 1 spot for growth in the last decade by the National Venture Capital Association – something that doesn’t completely surprise George Friberg, senior director at TVC.
“There was a very robust entrepreneurial community in New Mexico, but it was driven by the federal government and had always been a bootstrap effort in terms of those people finding financing,” Friberg says. “When TVC came along and said, ‘We’re going to make this nice connection between you and the venture capital community, at no charge to you,’ it was a real boon.”
Getting Ready for Prime Time
Another company that’s made a success of it is New Mexico Angels, whose members invest in early-stage companies and then help propel them to market acceptance.
Since 1999, the company has worked with venture-capital firms and other angel groups in the Southwest. “We are not a venture fund, and we don’t make direct investments,” says President John Chavez. “We have between 60 and 70 individuals who are core members, and another 12 or 14 corporate members and sponsors who invest through us.”
In the past five years, NMA has gone from around $130,000 in investments to $1.3 million, and the company has seen its first exit, selling Acoustic Cytometry Systems Inc.
Companies get much more than seed money from NMA. “If a deal isn’t investable but there’s something there, we’ll bring in an angel with the skill set to assist that entrepreneur,” Chavez says. “We spend a lot of energy on those deals that aren’t ripe for prime time.”