The State Investment Council drew broad praise on Tuesday for approving a new funding program that could allow up to $40 million or more to flow into startup companies statewide.The council unanimously approved the establishment of a new $20 million “fund of funds” that will provide money to micro funds around the state that invest in startup firms. The micro funds must contribute at least 50 percent, and possibly much more, in matching money, potentially doubling the amount of capital available for seed and early-stage investments across New Mexico.The initiative, to be organized and run under the SIC’s Private Equity Investment Program, represents a broad collaborative effort among the SIC, the state Economic Development Department, the City of Albuquerque, and the New Mexico Finance Authority.

Those offices and agencies worked together on structuring the new “fund of funds” program to support New Mexico’s burgeoning startup community, said Albuquerque Mayor Richard Berry.“It’s another step forward in laying the building blocks for the entrepreneurial ecosystem we’ve been trying to create in New Mexico,” Berry told the Journal. “We’ve been building business accelerator programs and providing coaching, mentoring and technical assistance to get new companies up and going, but we need venture funding for them to succeed. It’s the lifeblood of our startup ecosystem, without which even the best ideas can get left on the drawing board.”The $20 million “fund of funds” will include a $10 million investment from the state’s $4.5 billion Severance Tax Permanent Fund. Another $5 million will come from the U.S. Treasury, and $5 million more from private investors in New Mexico.That money is expected to act as a catalyst for more private equity to flow into the state, not just from investors in the micro funds, but from venture capitalists could seek later-stage investment opportunities in startups that get seed money, gain traction and need capital to grow.

For that reason, the “fund of funds” will be named the SIC’s “Catalyst Fund.”“It will catalyze private investment,” said Gary Oppedahl, Albuquerque’s director of economic development. “A lot of private money has been on the sidelines waiting for the SIC to provide the leadership and leverage to attract more private investment.”Gov. Susana Martinez, who sits on the 11-member council, had urged other members to support the program to continue diversifying New Mexico’s economy.“

It will help more of our innovators access capital and bring more ideas to the marketplace right here in New Mexico,” Martinez said.The program could provide money for up to ten micro funds statewide, including accelerators, incubators, and new and existing venture funds. Candidates could include ABQid in Albuquerque, the Arrowhead Center at New Mexico State University, and Los Alamos National Laboratory’s Venture Acceleration Fund, said Brian Birk of Sun Mountain Capital in Santa Fe, which will manage the SIC program.“We’ve had discussions with more than a half dozen existing and potential fund managers who are either already fund raising or are organizing funds to begin raising money,” Birk said. “Realistically, we could expect the first commitments to micro funds to begin flowing by the second quarter of this year.”Existing venture firms could also seek money, such as Cottonwood Technology, one of the few early-stage funds still actively investing in New Mexico.“This program will help fill a critical gap here,” said Cottonwood managing partner David Blivin. “It’s great that the SIC is stepping up and taking the lead on this.”

Source: Investment Council OKs new startups fund – ABQJournal Online