The University of New Mexico may be putting more skin in the technology transfer game with a new $1 million fund to invest up to $100,000 in startup companies working to take UNM inventions to market.
The UNM Foundation and the directing board of the Science and Technology Corp., which manages UNM’s technology commercialization, agreed to create the fund if regents approve it, said STC President and CEO Lisa Kuuttila.
“We’ll present it to the regents in April,” she said. “If approved, the foundation would provide $1 million that the STC would use to boost capital commitments by other local investors in startup companies. We won’t make unilateral commitments, but rather co-invest with angel investors or venture capital funds.”
That could help entrepreneurs bridge what’s known as the “valley of death” – a financial ravine where startups need a small amount of capital to further develop and prove their technologies before larger investors are willing to step in to take new products or services to market.
“Once a new company is formed, it’s very difficult to raise early stage seed money because that’s the most risky point for an investor,” Kuuttila said. “Through co-investments, the university can help reduce that risk.”
That may encourage more private investors to make commitments, said John Chavez, president of the New Mexico Angels – a group of individuals who pool resources to provide seed funding for startup companies.
“Early seed funding to take technologies from a bench-top prototype to a product is a big challenge for startups,” he said. “Having additional resources from the STC could help many small companies that license UNM technology. In the finance world, $100,000 may not sound like a lot, but it’s invaluable for a company that doesn’t have the resources it needs to move forward.”
UNM already provides “gap funding” for university faculty and researchers to continue developing commercially promising technologies after study grants have dried up. That allows scientists to prove their discoveries enough for Angels and other early stage investors to consider seed funding.
Since 2007, UNM has provided $525,000 in gap grants for 22 different UNM technologies, Kuuttila said. That’s led to six new startup companies, with three more in the works.
The co-investment fund, however, would provide assistance at the next stage, she said, once a startup already has been formed.