URL: http://www.abqjournal.com/AED/470198business06-22-06.htm

Thursday, June 22, 2006
With More Talent, Startups and Capital, Business Environment Heats Up
By Winthrop Quigley
Journal Staff Writer
    Technology Ventures Corp. sees its annual Flying 40 rankings as a measurement of New Mexico's technology business climate.
    Judging from the Flying 40 list of the state's fastest growing and largest technology-based businesses, plus the insights of investors and entrepreneurs, the climate has never been more inviting.
    The 40 fastest growing companies took in $907 million in revenue in 2005. The 40 companies listed last year had revenue of $739 million. The 2006 Flying 40 employed 4,947 people. Last year's group employed 3,622.
    Meanwhile, industry players say, financing for New Mexico's technology firms has never been more abundant. Recruitment of top-drawer business talent to run the companies, long an impediment to the technology sector's development, is getting easier.
    "The whole climate here is a lot better," said George M. Richmond, a veteran technology investor and founder of New Mexico Private Investors Inc.
    "In the past 10 years I've seen a tremendous amount of progress and improvement," said Richard H. Harding, general partner of investment firm Invencor/IVF. There is a long way to go to reach "what I'd call venture startup critical mass," he said, but "I see some very encouraging signs."
    "It's an exciting time to be working here," said Waneta Tuttle, an entrepreneur and CEO of Southwest Medical Ventures.
    The numbers tell the tale, said Technology Ventures Corp. CEO Sherman McCorkle. This year's Flying 40 have increased their revenue 50 percent in the past four years and have increased employment in their companies 35 percent, he said.
    Other indicators are just as good, he said. The science and technology business park outside the Sandia National Laboratories fence has grown from 285,000 square feet to almost a million square feet. Companies housed there have increased employment from 600 to 2,500 people.
    Harding said his firm was the second venture capital firm in Albuquerque when he arrived 10 years ago. Today there are 16.
    The infrastructure that entrepreneurs need, such as good lawyers and good business advisers, is improving too, Richmond said.
    "We're pretty close to firing on all eight cylinders," McCorkle said. "Fifteen years ago we were firing on five cylinders, and we were only a six-cylinder engine."
    No one thing is responsible for the changes, Richmond said. "It's a lot of factors that coalesced to generate a better environment."
    "We are a real unusual place in this country," Tuttle said. "We have lots and lots of technology. We have enough capital now, but that capital has only been available recently."
    Experienced people to run the companies forming here are beginning to arrive, Richmond said. "It takes a while to get these people to come here and recognize that life wasn't all that great where they were before."
    Harding said companies he's backing are able to recruit the talent they want about half the time. More important, he said, as more companies form in New Mexico, the talent to staff them find it easier to stay here because if they get bored with their current assignment, or if the startup doesn't make it, there is another local company to join.
    Capital is beginning to cycle, too, Richmond said. Investors in older deals are increasingly able to take their returns and invest them in new deals. That boosts the confidence of investors and entrepreneurs alike, leading to more deals, Richmond said.
    A lot of people have had a hand in the improving climate, McCorkle said, but much of the improvement is simply a matter of time. "The single advantage Research Triangle (in North Carolina) and Silicon Valley have over us is they started in the 1950s," he said. "You can only leap-frog so far. The rest of it you have to mature yourself into."
    "It's a long, slow process anywhere," Tuttle agreed. "I think we're really moving up on a curve here. It's a matter of scale and mass."
    What New Mexico needs, Tuttle said, is simple: more.
    "What we've got to have is first of all business creation, then the ability to retain and grow sustainable businesses," she said. More deals mean more recruiting, more talented people, more cross-fertilization of companies and ideas, more investment.
    As good as things have become, Richmond and Harding said, compared with mature entrepreneurial hot-beds, New Mexico is still very small. While there is one well-managed private investor's group in New Mexico, there are 150 in California, Richmond said.
    Harding sees a provincial attitude stifling development. "There is this sort of underlying thread of thought that if I don't dis your deal or don't throw cold water on your deal, my deal won't be successful. Or I've got to get this funded before you do because there is only so much capital to go around. In fact, there's plenty to go around."
    "The other missing element is the actual technology transfer out of the universities and (national) laboratories," Harding continued. "We still have a long way to go."
    The state has to improve public education, too, Harding and Richmond said. Too often, some recruits turn down New Mexico jobs after looking at the public schools, Harding said.
    The next three to five years will be "exciting and telling" for New Mexico's technology industry, Tuttle said. Companies that have been funded with seed money will be looking for second- and third-round financing then. At the same time, investors with cash today will be investing it over the next two or three years and looking for returns in three to five years.
    If the money gets parked, if the new rounds of financing are successful, if the recruitment continues, if the deals show up ... well, imagine what the Flying 40 will look like in 2010.