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Arrowhead Innovation Fund receives $800,000 for high-tech startups

Arrowhead Innovation Fund receives $800,000 for high-tech startups

Amanda Bradford, For the Sun-News | May 3, 2017

LAS CRUCES — The Arrowhead Innovation Fund at New Mexico State University’s Arrowhead Center is one of three organizations to receive investment from the state’s Catalyst Fund, a $20 million “fund of funds” to support New Mexico companies, Gov. Susana Martinez announced Tuesday in Albuquerque. The Catalyst Fund is expected to support more than 50 companies in New Mexico and will focus on aiding technology startups.

“New Mexico has the potential to be the next tech-startup capital of the United States,” Martinez said in announcing the investment. “Through this fund, we’re going to help these companies get off the ground to become the next Apple or Microsoft. And by doing so, all of New Mexico will reap the benefits, because we will diversify our economy and create more jobs.”

The Arrowhead Innovation Fund will receive a total investment of $800,000 from the Catalyst Fund, which, combined with investments from the NMSU Foundation and other private investors, will put the Arrowhead Innovation Fund close to its funding goal of $2 million.

The Arrowhead Innovation Fund will provide significant, transformative investment in some of the most promising companies being developed by NMSU affiliates or served by Arrowhead Center’s programs that are open to the community. The fund is now accepting applications at arrowheadcenter.nmsu.edu/aif, with a goal of investing in approximately 12 companies over the next three to four years.

“The investment that we can now make in these companies is significant, but there’s an additional value that we’ll provide in the form of access to the professional networks of our board members, who come from varied areas of expertise and can accelerate the growth of these companies,” said Estela Hernandez, managing director and president of the Arrowhead Innovation Fund.

Lawrence Chavez of Lotus Leaf Coatings is a member of the AIF Investment Committee. “The Arrowhead Innovation Fund is filling a critical need in the innovation ecosystem here in southern New Mexico,” Chavez said. “The support of the Catalyst Fund enables us to leverage their investment with the other supporters of the Arrowhead Innovation Fund to help seed these phenomenal technologies that come out of NMSU. Their ideas have real-world market potential that is very exciting.”

As NMSU’s innovation-driven economic development hub, Arrowhead Center provides technology incubation and commercialization through programming such as its Arrowhead Startup Sprints and the Launch proof-of-concept program, which identifies inventions and research products likely to be marketable, and provides cash awards and services to realize the companies’ potential.

The creation of a venture capital fund to support innovation was one of the goals identified by Arrowhead Center when it successfully competed for a million-dollar Economic Development Administration i6 Challenge matching grant, which has funded the expansion of Launch and the development of the Arrowhead Innovation Network.

“The i6 Challenge grant made a huge difference in our ability to move NMSU innovation to the market, and the Arrowhead Innovation Fund is an expansion of that impact,” Arrowhead Center Director and CEO Kathy Hansen said. “This investment from the Catalyst Fund will help AIF fill a critical investment gap and greatly accelerate the growth we can facilitate in New Mexico and beyond.”

The Catalyst Fund comprises $10 million in public funds allocated by the State Investment Council, $5 million from the State Small Business Credit Initiative and $5 million in commitments from private institutional investors. The fund requires that participating organizations provide matching private investment, bringing the total investment to at least $40 million.

“This fund will build on New Mexico’s strong tradition of success in the high-tech and entrepreneurial sectors,” said Economic Development Secretary Matt Geisel. “This investment strengthens our commitment to the success of homegrown New Mexico companies and hardworking New Mexican entrepreneurs.”

New Mexico-based companies wishing to identify venture capital funds that have received Catalyst Fund investment will be able to find a list on the New Mexico Economic Development Department’s website, www.gonm.biz.

For more information about the Arrowhead Innovation Fund, visit arrowheadcenter.nmsu.edu/aif.

New state Catalyst Fund announces first awards

New state Catalyst Fund announces first awards

By Kevin Robinson-Avila / Journal Staff Writer | May 2, 2017

ALBUQUERQUE, N.M. — Many cash-strapped New Mexico startups may soon get a critical boost from a state-backed investment program that’s pumping an initial $4.65 million into three local venture funds.

Gov. Susana Martinez announced Tuesday that the state’s new $20 million “Catalyst Fund” is making its first three commitments to investment funds managed by New Mexico State University, and by the Albuquerque-based firms Cottonwood Technology and Tramway Venture Partners. Those organizations will, in turn, match state money dollar-for-dollar, doubling the amount of new cash to become available for local startups seeking seed and early-stage capital.

The Catalyst Fund launched last year with $10 million from the State Investment Council and $5 million each from the U.S. Treasury Department and private investors. It plans to invest in eight to 10 venture funds around the state over the next couple of years, generating a total of $40 million for startups after counting matching funds from Catalyst recipients.

That could provide critical, early-stage support for 50 to 60 companies, Martinez said in a statement.

“New Mexico has the potential to be the next tech-startup capital of the United States,” the governor said. “Through this fund, we’re going to help these companies get off the ground to become the next Apple or Microsoft. And by doing so, all of New Mexico will reap the benefits because we will diversify our economy and create more jobs.”

Sun Mountain Capital, which manages the Catalyst Fund, has been vetting potential fund recipients since last year. More venture firms will receive money in coming months.

The first three investments include $2.5 million for Cottonwood Technology, $1.35 million for Tramway Ventures, and $800,000 for NMSU’s Arrowhead Innovation Fund.

All three demonstrated the investment and management experience needed to effectively deploy capital in startups with compelling products and services, said Sun Mountain Managing Partner Brian Birk. And all three have raised significant private capital,  independent of the Catalyst Fund.

That’s critical, not just to meet the dollar-match requirement, but because the Catalyst Fund can only provide up to 40 percent of the total amount raised by a venture fund.

“We’ll provide up to 40 percent of the value of a fund, up to a maximum of $2.8 million,” Birk said. “It’s incumbent on fund managers to raise the rest of their capital from private investors.”

Of the three recipients, Cottonwood is by far the most-established fund. It’s an early-stage investor with $40 million now under management, half of which has already gone to New Mexico companies in recent years. The Catalyst Fund will help boost money available for more startups, said Cottonwood Managing Director David Blivin.

Tramway is a new venture fund formed this year by serial entrepreneurs with extensive experience in New Mexico. To date, it’s raised $2.7 million of a planned $8 million fund that’s focused on life science companies with innovative technology for medical research, diagnostics and healthcare delivery, said Tramway Director Waneta Tuttle.

NMSU, meanwhile, has raised nearly $1.7 million for a new $2 million innovation fund, including $500,000 from the NMSU Foundation. It will invest $50,000 to $150,000 in companies through the Arrowhead Center, which manages all of the university’s technology transfer programs.

Fund managers said Catalyst support will help plug the state’s chronic shortage of seed and early-stage capital. That’s critical for new companies to transverse the “valley of death” — a financial ravine where startups need a small amount of capital to further develop and prove their technologies before larger, institutional investors are willing to step in.

“This can help fill that critical capital gap,” said Arrowhead Director Kathryn Hansen. “We need those early-stage investments to help companies mature and move forward on the path to market.”

Economic Development Secretary Matt Geisel said the Catalyst Fund offers another tool for building the state’s entrepreneurial ecosystem.

“This investment strengthens our commitment to the success of homegrown New Mexico companies and hardworking New Mexico entrepreneurs,” Geisel said.

Las Cruces groups flush with cash for startups

Las Cruces groups flush with cash for startups

May Ortega, Albuquerque Business First | May 4, 2017 

Significant funding for two New Mexico State University-affiliated groups has given them the green light for several forms of startup support.

The Arrowhead Center received a $2.5 million contribution Friday from the Hunt Family Foundation — the largest gift it has ever received. Founded in 2004, the nonprofit serves as the school’s hub for innovation resources.

Four days later, the university’s for-profit Arrowhead Innovation Fund — a separate entity from the Arrowhead Center — was announced as one of three initial recipients of the Catalyst Fund. The venture capital fund was granted $800,000, bringing its total funding to $1.6 million. This has triggered the start of the Innovation Fund’s investment process, according to Managing Director and President Estela Hernandez.

“The significance of the investment by the Catalyst Fund is that Arrowhead Innovation Fund now surpasses the first close investment target of $1 million, which enables us to shift to identifying the first of up to 12 companies for investment over the next three to four years,” Hernandez said. “Reaching the final close target of $2 million ensures AIF has the funding that we foresee will be needed to invest in these companies and help them reach critical milestones in technology and company development to attract follow-on funding.”

The venture fund’s application is officially open. It is looking to invest in up to 12 New Mexico startups.

Meanwhile at the Arrowhead Center, Director Kathy Hansen said it is excited to use its millions in funding to help innovative businesses in New Mexico, El Paso, Texas, and Ciudad Juárez, Mexico — dubbed the Borderplex region.

“We’ll be able to provide greater opportunities for partnerships to support our researchers as they explore ways to apply their work and make an impact in the marketplace,” Hansen said. “We’ll also help drive improvements in the regional economy by continuing to foster a culture of entrepreneurship that addresses the need for business and job creation in innovative ways.”

The center hosts various startup-focused programs, like the state’s first agriculture accelerator, titled AgSprint. It accepted six “agtech” startups last month and will award $2,000 to each one that completes the first five weeks of the curriculum.

Hansen said the multimillion-dollar donation from the Hunt Family Foundation helps the center do its part for New Mexico State University’s newly launched “Ignite Aggie Discovery” campaign. The second-largest comprehensive campaign in the university’s history, according to the school, was created to raise money so its students have the tools to continue their education.

Since its silent phase began in 2013, 20,800 donors have helped raised more than $72 million, putting the project more than halfway to its goal of $125 million.

The $2.5 million donation to the Arrowhead Center will also allow it to create more programs as time goes on, all in effort to advance the area’s technological competitiveness and innovation, Hansen said.

“It’s an exciting time and we’re poised for tremendous growth,” she said. “We’re extremely grateful for the opportunity that the Hunt Family Foundation has provided to build on the work we’re doing.”

Arrowhead Center enterprise adviser selected as Kauffman Fellow

Arrowhead Center enterprise adviser selected as Kauffman Fellow

Arrowhead Center Enterprise Adviser Estela Hernandez Hartley has been accepted into the Kauffman Fellows, a highly selective program in which a cohort of business and investment professionals completes a two-year curriculum and individual development plan with executive coaching, facilitated mentoring and peer learning in innovation investing.

As an enterprise adviser, Hartley shares her expertise in qualitative research, collecting valuable consumer insights to help clients design innovative business models and compelling customer experiences with clients at Arrowhead Center, New Mexico State University’s economic development and entrepreneurship hub.

Kauffman Fellows represent diverse academic and work backgrounds. While the Kauffman Fellows program notes desired traits for applicants, such as demonstrated leadership strengths, an “appetite for risk,” and domain expertise in science, technology or business, the program attracts candidates from a broad range of experience.

“The world is increasingly diverse,” Hartley said, “and I believe the smartest entrepreneurs understand they need advisers and investors with whom they can collaborate, and that represent the diverse world for which they are creating products and businesses.”

The Kauffman Fellow’s intensive program includes self-guided learning that focuses on venture industry topics, core investment principles and practices, and leadership development. Fellows also undertake an independent field research project. While Hartley’s research project has not yet been defined, it will almost certainly include components of design thinking, a model for creative problem-solving that underpins the majority of her work as a consultant and mentor. Design thinking’s inclusion of multiple perspectives to identify and develop solutions to challenges fits well with the Kauffman model.

“As a Kauffman Fellow, I look forward to gaining structured and experiential training in venture capital to increase my investment knowledgebase, round out my strategic skill set, and apply my learning in support of the development of highly successful ventures,” Hartley said.

Born and raised in Las Cruces, Hartley graduated with a Bachelor of Community Health degree from NMSU. She then earned her MBA in design strategy from the groundbreaking program at California College of the Arts in San Francisco. She also studied interior design, with a focus on healthcare facility design, at the Illinois Institute of Art in Chicago. Hartley launched E. Hartley Consulting, a design strategy firm, in Las Cruces in August 2012.

Arrowhead Center Director Kathy Hansen said Hartley’s acceptance to the Kauffman Fellows program is significant for Arrowhead, as well.

“Estela’s expertise and gift for mentoring has been benefitting our clients for the last three years,” Hansen said. “The skills and connections she will develop as a Kauffman Fellow will just add to an already fruitful relationship.”

Hartley is sponsored as a Kauffman Fellow jointly by Arrowhead Center and Joseph Advisory Services, an El Paso-based early-stage venture capital and economic development advisory firm founded by Arrowhead Center Investor in Residence Beto Pallares, who is also a Kauffman Fellow.

“Kauffman Fellowship represents life-long membership and access to the top-tier investors and best practices that will help nurture the innovation ecosystem in the Borderplex region,” Pallares said. “I am thrilled that Estela joins the Society, and I look forward to how the region will be enriched.”

The Kauffman cohort meets in person periodically throughout the program, gathering in various locations throughout the U.S. and internationally for collaborative learning experiences. Hartley completed the program’s orientation in Palo Alto, California, in June and will be just the second Kauffman Fellow to represent New Mexico.

“Having two Kauffman Fellows onboard is an incredible asset for Arrowhead Center and the clients and communities we serve,” Hansen added. “The skills they have and continue to develop, along with their access to a network of professionals working on the cutting edge of investment and entrepreneurship ensures Arrowhead will remain at the forefront of innovative economic development.”

 

NMSU launches Aggie Innovation Fund with Foundation help

NMSU launches Aggie Innovation Fund with Foundation help

The Arrowhead Center, New Mexico State University’s business accelerator, is launching a fund to help inventors get their projects off the ground.

The NMSU Foundation has pledged up to $500,000 in matching contributions to the fund to help it get off the ground. Once the fund reaches $750,000, the foundation will kick in $250,000. For every dollar raised over $750,000, the foundation will contribute 25 cents, up to an additional $250,000.

NMSU Foundation Investment Chair Bobby Lutz said the foundation supported the investment unanimously, and that it will provide crucial help to New Mexico entrepreneurs trying to get their projects off the ground.

“Supporting entrepreneurship is an important goal in NMSU’s strategic plan for economic development,” Lutz said. “The investment committee sees this as a multifaceted investment that could provide significant economic returns to the Foundation. It’s an investment in the school’s infrastructure, and a recruiting and retention tool for both students and faculty.”

The fund is an extension of ideas that the Arrowhead Center put into practice with its Launch proof-of-concept program, which provides cash to entrepreneurs and inventors working on projects that the center deems marketable. Arrowhead Center Director and CEO Kathy Hansen said the fund will expand on the Launch concept, giving it an influx of cash.

“Launch has demonstrated that this model works,” Hansen said. “However, the funds we had to invest were extremely limited. The Aggie Innovation Fund will allow us to truly test the wings of what the NMSU community is creating.”

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NMSU Foundation Investment Launches Aggie Innovation Fund

NMSU Foundation Investment Launches Aggie Innovation Fund