Albuquerque Journal, N.M., tech bytes column: Investment year forecast, and invention in print
BYLINE: Andrew Webb, Albuquerque Journal, N.M.
Nov. 20--It looks as if New Mexico's recently revived venture capital scene will hold steady this year, if it doesn't break any records.
The New Mexico Venture Capital Association announced this month that startup companies in the state took in seven rounds of venture funding, totaling $24.9 million, during the third quarter of 2006. That brings to about $41.2 million the total invested so far in 18 deals this year, not counting a $225 million round of convertible debt funding raised in July by Eclipse Aviation. That funding could later be turned into equity stakes in the Albuquerque company.
Last year's investments in New Mexico totaled more than $140 million -- a figure that included $70 million in investments to Eclipse Aviation and Advent Solar.
"If you subtract the two big rounds we know happened last year, we'll be getting close in 2006," said NMVCA survey chairman Tom Stephenson, a founding partner of Albuquerque's Verge Fund. "In terms of the number of deals, we're almost certain to exceed 2005."
New Mexico's venture capital activity topped out at $130 million in 2001, but it was followed by three years of investments totaling less than $30 million until 2005.
Though its recovery largely follows that of the rest of the country, which saw investments exceeding $100 billion in 2001 before settling back down to about $20 billion, some of the credit can go to the State Investment Council, which manages the state's $14 billion in permanent funds. Since Gov. Bill Richardson urged resuscitation of its efforts to participate in regional venture capital funds, it has committed more than $250 million in state funds to 19 venture capital firms, which are required by statute to do some business in the state.
"New Mexico taxpayers are getting a good return on their investment," Mark Heesen, president of the 370-member National Venture Capital Association, said during a recent presentation to local investors and entrepreneurs.
Third-quarter investments ranged from a $300,000 round to a Series B, or later round, totaling $17.5 million -- one of several later-stage rounds seen in New Mexico in the last two years.
"These companies are maturing to a point where greater capital accelerates their growth in the marketplace," said NMVCA board member Les Matthews, a partner in seed-stage investor Mesa Capital Partners.
NMVCA does not name investment recipients, Stephenson said.
The $17.5 million, however, went to VeraLight, which is developing light-based devices that diagnose diabetes.
TRUTOUCH IS A TIME "TOP TECH": Albuquerquebased TruTouch Technologies alcohol testing device, which uses light shot through a forearm rather than conventional breath or body fluid measurements, was one of Time magazine's Best Inventions 2006 showcased in last week's issue.
The device, which is expected to go on sale to public safety agencies early next year as a replacement for the ubiquitous Breathalyzer, was in good company.
Other inventions included robotic suits for stroke patients, hypoallergenic cats for pet-lovers with allergies, a lever-action snow shovel with a wheel for a fulcrum, and a battery-powered supercar that goes from 0-60 in 4 seconds.
NEXTGEN PONDERS ITS FUTURE: Even its executive director admits it -- sometimes it's hard to explain just what Next Generation Economy does.
The 6-year-old nonprofit economic development organization says it has made a name for itself not by "chasing smokestacks" -- economic development-ese for company recruiting -- but by working behind the scenes to position New Mexico as America's economy shifts from making things to inventing better ones.
But after years of making "innovation" and "creative class" part of the state's lexicon, NextGen faces a budgeting crunch that could shut it down by the end of the year.
"People just don't get us," Mike Skaggs acknowledges. "We've always been the ones looking out there at what trends are coming down the pipe."
NextGen was founded in 2000, as Sandia and Los Alamos National Laboratories were trimming employees. Its early funding came from money Sen. Pete Domenici, RN.M., secured from the Department of Energy for socalled Community Reuse Organizations. A similar nonprofit, Rural Development Corp., exists in northern New Mexico. NextGen has also received funding, with the help of Sen. Jeff Bingaman, DN.M., from the U.S. Small Business Administration.
From the start, NextGen has aimed to capitalize on the high-tech work performed at labs, universities and other state institutions by encouraging and training entrepreneurs.
It has done this through a range of projects, including an annual Entrepreneurial Leadership Accelerator training program and the creation of a cleanroom factory at the University of New Mexico with $17 million in donated equipment from Intel Corp. That cleanroom has spun out several companies, most notably Advent Solar, which recently completed at 90,000-square-foot plant at Albuquerque's Mesa del Sol.
NextGen has also been a supporter of networking between so-called "clusters" of similar businesses and was one of the first organizations in New Mexico to recognize the value of the "creative class" -- a generation of eager, arts-and-culture-hungry entrepreneurs described by Carnegie Mellon professor Richard Florida in his popular book "The Rise of the Creative Class."
NextGen hired Florida to assess Albuquerque's potential to attract this growing group of businesspeople.
Funding for NextGen has dwindled in the last couple of years -- this year it operated on a $600,000 budget, down from more than $1 million in previous years.
Skaggs says he remains hopeful about some potential contracts with the city or state, but notes he would like to see the organization continue as an autonomous, community-based economic developer as well.
Andrew Webb covers technology for the Journal. You can reach him at 823-3819 or awebb@abqjournal.com.
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