Moving an invention from the lab to the marketplace is an exciting undertaking, but it can be daunting. A useful technology is just the starting point, a necessary but not sufficient condition for forming a successful company. The process of forming a company, however, is not a mystery and there are many sources of information available to help the inventor. Below are some links to get the new entrepreneur started.
- Small Business Administration Guide to Business Plan Writing
- UNM Entrepreneurship Guide
- The Entrepreneur’s Guide To A Biotech Startup
- How to Really Create a Successful Business Plan: Step-by-Step Guide by Gumpert (Amazon Purchase)
- “Biodesign: The Process of Innovating Medical Technologies”. It is structured like a textbook and a great guide for developing and commercializing medical devices and other biomedical technologies.
- Allows for a start-up to raise small amounts of capital from large pools of individual investors. Web-based platforms such as Kickstart and Prosper allow entrepreneurs to raise up to $1 million annually, as sanctioned by the new legislation (JOBS Act).
- Venture Fund
- This is an entity that has raised money for outside investors, called Limited Partners,that invest in start-ups, early stage, mid stage and late stage companies. They take an equity stake in the company and provide contacts, expertise and mentoring to move the company up the value chain.
- This is an entity that has funds, usually state, local and federal, to provide loans to start-up and early stage companies. They ask for collateral and usually assist the start-up and early stage company with business advice.
- Micro-lenders with Capital from the New Mexico Small Business Investment Council
- Angel Investors
- These are individuals in a group or individually who make equity investments in start-up and early stage companies. In addition to money, Angel investors like to influence the start-up or early stage company to move it up the value chain.
- Mezzanine Debt Lenders
- These are entities that raise funds from individuals and institutions, called Limited Partners, to make debt investments in early stage revenue companies. They invest in companies that have revenue and have earnings; they stay away from non-revenue, non-profitable companies.
- Hard Money Lenders
- These are entities that make loans to companies that fit into their investment profile. They are milestone based lenders; they beat the daylights out of their portfolio companies, if they don’t meet the milestones that have been agreed to.
- Dry Powder
- This is the amount that a fund has raised from the limited partners but not deployed. Example: XYZ fund raised $30 Million and has invested $10 Million: Dry Powder = $20 million.
- Management Fee
- This is a fee that a fund, either equity or debt fund, charges its Limited Partners for managing their money. Typical fee is 2.00% to 3.00% of committed capital on a yearly basis.
- Committed capital
- The amount a fund has raised from its limited partners: Example: XYX fund raised $30 million from its limited partners, XYX fund has $30 million in committed capital.
- Capital Call
- The mechanism that funds use to “call” money from their Limited Partners. Example: Limited Partner “A” committed $1 million for fund XYX. Limited Partner “A” does not have to write a check for $1 million dollars, XYX fund will call money against Limited Partners “A” commitment, when they need to fund a company.
Ventures Funds with Money from the New Mexico Private Equity Program
The following information was published by the state investment council and updated to 9/30/2010. The following funds have committed capital from the NM Private equity program and these commitments were made after 01/01/2006. This date was chosen because most venture funds have a five year period to deploy their capital.
Village Ventures Fund II-B, L.P.
State committed capital $15 Million.
Dry Powder as of 9/30/2010: $3.5 Million.
NMSIC Co-Investment Fund L.P. Classic.
State committed capital $30 Million. Managed by Sun Mountain Capital
Dry Powder as of 9/30/2010: $19.0 Million
NMSIC Co-Investment Fund L.P. Focused.
State committed capital $60 Million Managed by Sun Mountain Capital
Dry Powder as of 9/30/2010: $23.4 Million
vSpring III L.P.
State committed capital $15 Million.
Dry Powder as of 9/30/2010: $3.9 Million
EPIC Ventures Fund IV
State Committed capital $10 million
Dry Powder as of 9/30/2010: $5.5 Million
Venture Funds and Micro Lenders with capital committed from the New Mexico Small Business Investment Council
The New Mexico Small Business Investment council was created and funded to assist the small business eco-system with capital. The NM SBIC, provides dollars to venture funds and micro-lenders to deploy to New Mexico based companies. Their website is http://www.nmsbic.com
Venture Funds with commitments from the New Mexico Small Business Investment Council.
Regional Angel Investment Groups
The New Mexico Angels work with a number of regional angels groups. The New Mexico Angels are a group of seventy accredited investors based in Albuquerque and Santa Fe, New Mexico. They are technology and location agnostic. Their typical deal is $100K to $250K. You can submit your company on their website at http://www.nmangels.com.
The Desert Angels are a group of angels based in Tucson, Arizona. They look at all types of deals, but their expertise is in the life science sector. They have monthly meetings in Tucson and use the same submission and review platform that the NM Angels do. So they share deals. Website: http://www.desertangels.org/
The Arizona Technology Investor Forum (ATIF) is an active community of accredited investors who invest in high-potential technology companies based in Arizona. ATIF members participate in four investor meetings a year to consider investment opportunities presented by finalists screened by NM Angels’ selection process. Since May 2007, ATIF members have invested over $2.3 million in Arizona-based technology ventures that have presented at ATIF meetings. Website: http://www.atif-az.org
Ventures Funds active in New Mexico
The Cottonwood Technology Fund. Based in Santa Fe, has been very active in the last year in funding start-ups in New Mexico and Texas. Website: http://www.cottonwoodtechnologyfund.com
- New Mexico Community Capital.
- Based in Albuquerque: Website: http://www.nmccap.org
- New Mexico Mezzanine Partners
- This is a local mezzanine debt fund active in New Mexico. They have money from the NMSBIC.
- Agility Ventures Lease Fund
- This is an equipment lease fund based in Arizona. It is a very active fund with a number of the NM Angels as investors. Their focus is on the date warehousing and internet wireless space. Website: http://www.agilitysolutions.net/index.html
- Private Equity
- During the last year, the New Mexico Angels have been approached by two private equity firms. These firms are interested in doing deals in New Mexico.
- Cerca Group LLC is a private investment firm focused on software, business services, and communications companies with greater than $1 million of revenue and positive cash flow. Cerca Group is particularly focused on finding investment opportunities in New Mexico and welcomes all inquiries. Please direct inquiries to John Bingaman at email@example.com.
- The second firm is looking for companies with revenue above $10 million that are seeking a buy-out or expansion capital. They like a recurring revenue model.
New Mexico has three start-up funds. It is believed that these funds have raised capital with the thought process of starting companies and funding those companies.
- Puente Partners
- According to the State of New Mexico State Investment Council, September 30, 2010 NMPEIP program report, Puente Partners received money from the Private Equity Direct investment program.
- According to the State of New Mexico, State Investment Council, September 30, 2010 NMPEIP program report, Noribachi received money from the Private Equity Direct investment program Website: http://www.Noribachi.com
NM Start-up and early stage company financing resources adapted from John Chavez, NM Angels.