Albuquerque, NM – April 23, 2014 On April 8th the UNM Regents approved a proposed new co-investment fund that will allow the Foundation to co-invest with local angel investors and venture capital funds in UNM start-ups created from UNM technology. The Fund will be administered by STC through a UNM Co-investment Committee. To read more about the initiative, see Kevin Robinson-Avila’s April 19 article, “UNM Regents OK $1M Investment Fund,” from the Albuquerque Journal, reprinted below. Also, see the STC article, “New Co-investment Fund Will Benefit Start-ups Created from UNM Technologies,” reprinted below.
New Co-investment Fund Will Benefit Start-ups Created from UNM Technologies
The number of UNM technologies with high technical excellence and high commercial potential created each year by UNM researchers continues to grow, as does the number of start-up companies STC.UNM spins out to develop these technologies into products and services for New Mexico’s public and economic benefit. Albuquerque has an active and rapidly growing community of start-up companies. Many of them are UNM companies developing UNM technologies with investments from local venture capital firms. There are currently 41 active start-up companies based on UNM technology and 28 of them are located in Albuquerque. In 2013, STC spun out 9 start-up companies with the goal of creating 7-10 new companies in 2014. Early investments are critical to the survival and growth of start-up companies.
STC CEO Lisa Kuuttila explains: “Just as early stage technologies need gap funding to help inventors develop their inventions so they are more commercially interesting to a company for licensing or to an entrepreneur as the basis for a new company, so too do these new companies need seed capital, or early stage investment, to help them grow to the next level to attract bigger investors. It’s referred to as the ‘continuum of capital’ that is needed for the different growth stages of a business. What we really need to sustain the start-ups we have and to increase the number we are spinning out is more seed capital investment.
“As the University’s technology-transfer and economic-development arm, STC has considerable commercialization experience and an excellent working relationship with the entrepreneurs and New Mexico angel investors and venture-capital firms that partner with the organization to bring the technologies being developed by talented UNM inventors to the marketplace. In 2012, STC saw the need to join our local investors in making additional capital available to nurture these young companies to their next level of development by proposing the creation of a co-investment fund. We need a stronger investment community to help these companies grow and expand our economy. We believe establishing a co-investment fund administered by STC.UNM is a significant step in the right direction.”
The proposal was submitted to the UNM Foundation for funding consideration. After review by the UNM Foundation’s Investment Committee, a policy was developed to provide procedures and criteria for making investments from the fund.
The UNM Foundation submitted the proposal for a Co-investment Fund for UNM Start-up Companies to the UNM Board of Regents. The Regents approved the establishment of the Fund at their April 8, 2014 meeting. The Fund will allow the Foundation, under its private equity investment policy, to co-invest with local investment firms in UNM start-up companies that are created from technologies developed at the University of New Mexico. Requirements include only investing in UNM start-up companies, a cap on the investment amount in any one company, only investing as a co-investor matched on a 1-to-1 basis by a venture capital fund or an angel group, and review and approval of all investments by a Co-investment Committee.
UNM regents OK $1M investment fund
Venture capital will assist startup firms in commercializing tech
By Kevin Robinson-Avila Journal Staff Writer
The University of New Mexico soon will be making investments of up to $100,000 in startup companies that form to market UNM technology.
At the Board of Regents meeting April 8, regents unanimously approved creation of a co-investment fund that would draw on UNM Foundation money to help companies commercialize university inventions.
The regents authorized use of up to 0.5 percent of the principal, or a total of $1.8 million of the $390 million currently held by the foundation, said Lisa Kuuttila, president and CEO of UNM’s Science and Technology Corp., the university’s technology transfer arm.
The STC and the UNM Foundation jointly had requested authorization to draw on up to $1 million.
“The foundation has been given the authority to provide additional monies if we went back and requested it, but for now we’re looking at a $1 million fund,” Kuuttila said.
To commit funds to companies, the STC must “co-invest” together with venture capital funds or angel investors on a one-to-one basis to match what those sources give to startups. UNM investments also are limited to a maximum of $100,000, and they must first be approved by a UNM Co-Investment Committee yet to be established.
Such funding 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.
“It’s needed because there’s a lack of early stage capital available in the state, which makes it difficult for new startups to get the initial funding they need to move forward,” Kuuttila said.
There are currently 41 active startups working to commercialize UNM technology, 28 of them located in Albuquerque.
“This will support the work of our faculty and students and the entrepreneurs who work to commercialize their technology,” said UNM President Bob Frank. “We believe New Mexico should drive innovation, and this policy helps us to do that.”
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