When Investors Discovered New Mexico (And What They Found)

By Autumn Gray For Innovation Magazine

Venture capitalists 20 years ago viewed New Mexico not only as foreign territory for investment but also as devoid of economic opportunity as it is of water. That was the best-case scenario. For many of those deal-seeking investors, the state simply didn't exist. Until one day, the clouds parted, blades of sun illuminated the landscape like a fan and investors and entrepreneurs alike began to hear heavenly music that attracted them to the area. While that's a terribly clichéd visual, it's not too far afield from how Technology Venture Corporation's annual Deal Stream Summit has influenced the private investment landscape, taking it from zero to 60 in a matter of seconds when considering typical tech-transfer time. Since the summit (formerly called the Equity Capital Symposium) began in 1993, it has:

• Funded one in three of startups presenting at the summit. That number has remained steady from Day One.

• Grown to attract 40 to 50 unique venture firms to Albuquerque.

• And earned a reputation as a marquis networking event nationally that brings together in one place investors, service providers, national laboratory executives, universities, scientists, engineers, licensing officers, and other sources integral to the deal flow.

"The biggest challenge we had in 1993 in New Mexico was there was no venture capitalism. It was viewed as investment in an entrepreneurial wasteland. We needed to showcase that the state was willing to make an investment in venture firms," said John Freisinger, TVC's president and CEO. "So in the early
years, the TVC strategy was intentional about showcasing NewMexico. In later years, it became about showcasing world-class deals that happen to be from New Mexico."

Most of the 10 to 20 entrepreneurs that take the stage to present their business cases are technology-based and headquartered either in the state or in a location that has a Department of Energy lab. They may be DOE researchers, scientists who have left a lab to start companies, or lab retirees, for example. "There is cross pollination between the labs and community so that there are many linkages we can demonstrate between the Department of Energy's tech-transfer mission and the companies that are on the stage," Freisinger said.

Tom Stephenson, managing general partner at Verge Fund, says his firm has participated at the summit as an investor since his company began 10 years ago. Stephenson has also served as an advisor to a presenting team. While he says he does not know how many entrepreneurs from the summit the Verge Fund has
helped fund, many of the startups in the company's portfolio have been involved in the conference.

"TVC has done an excellent job of understanding the federal labs and their infrastructures not only as to Sandia but increasingly on a national basis. So that puts them in a good positon to help those in connection with the federal labs to get off on the right footing in the market to tell their story in a more appropriate way. That can be a real challenge when coming out of the tech transfer world." Summit attendees can be certain that those who are chosen to present are the best of the best, capable of success in the global marketplace, due to TVC's rigorously competitive screening process.

"You just don't get a free pass when you walk through the door of TVC," Freisinger said. "By the time you reach the stage, you have a well-thought out business strategy that is adapted to attract venture investment. Because the quality is so high, most people will not reach that bar."

TVC helps entrepreneurs to prepare for the summit by coaching and advising them on how to take their technology or idea and turn it into a marketable business. Much of the focus is then on creating business plans and strategies for how to present to a variety of audiences.

Michael Vickers, Director of Operations at Albuquerque based
Maas Biolab, says his company presented at the summit 10 years ago. While it did not result in direct funding for the neuropharmaceutical business, the event and his experience with TVC was the catalyst for what Vickers calls "the super unusual course" the company has taken.

Maas Biolab is developing a treatment for chronic neurodegenerative diseases including amyotrophic lateral sclerosis (commonly known as Lou Gehrig's disease), as well as Alzheimer's, Parkinson's and Huntington's diseases.

"TVC has been our most important partner since our relationship began," Vickers said, highlighting its help with intellectual property, recruiting and obtaining federal funding, including a Small Business Innovation Research Grant of $2.1 million from the National Institutes of Health.

"We're a really good example of everything else they can do besides the funding at the summit. We are a shining example of the preparation they put a company through to present at the summit, and that really strengthened us and positioned us to be able to take alternative paths, like creating a Swedish spinoff
company and taking it public in 2008." Called NeuroVive Pharmaceutical, it is developing treatment for the acute neurological indications of stroke, spinal trauma and traumatic brain injury. "Last year, it moved up to the NASDAQ OMX, which is the biggest Nordic stock exchange," Vickers said, adding that it now has a market cap of $320 million.

"That kind of highlights the unique trailblazing we've done, but it all comes from the way TVC nurtured and fostered us initially that has allowed us to do all these things. If I were going to trumpet something about TVC, it's that we were able to take this idea they helped nurture before the world and have it be a
big success."

Brian Birk, managing partner at Sun Mountain Capital, says his firm has participated in the Deal Stream Summit for the last 10 years and has funded about a half dozen startups that have been in some way involved with TVC or that have presented at the conference.

"Originally our interest was piqued by the unique access that TVC has throughout New Mexico to some of the most interesting technologies and most talented entrepreneurs at Sandia National Labs," Birk said.

"What 's really intriguing about the technologies that TVC has identified is not just that they're usually based on some prolific scientific research but they're very advanced in terms of funding received to bring them to a commercialization point. We think TVC has an important role in preparing companies and business plans and taking that technology to the marketplace and molding it to meet a customer need, which is essential for a small business."

In addition to its investment opportunities for VCs and funding streams for presenters, the summit allows for and encourages the formation of one-on-one relationships for anyone who plays a role in the deal stream flow. The event is akin to a world's fair of networking for those interested in accelerating new technologies.

"For venture capitalists who have no familiarity with New Mexico or TVC, I think this is a terrific opportunity both in terms of seeing some very interesting companies that have already been vetted and are looking for investment but also an opportunity to network with a lot of VCs in the state and the deals they are involved with, different sources of deal flow, just to get the lay of the land," Birk said. "It's really a great opportunity to spend a day or two and very quickly get down the learning curve of the deals in New Mexico."

This year's Deal Stream Summit is scheduled for 1:30 to 8 p.m. Oct. 7 at the Anderson-Abruzzo Albuquerque International Balloon Museum, 9201 Balloon Museum Drive NE. For registration and other details, visit http://www.techventures.org/deal-stream-summit-2014. The registration deadline is Oct. 1.

Autumn Gray is a freelance writer based in Albuquerque.