New Mexico Angels President John Chavez, Vice President Dorian Rader and board member Sherman McCorkle are partnering together to launch the new NMA Ventures, which will invest between $200,000 and $400,000 in eight to 10 startups over the next three years.
The entity will operate as an independent fund for equity investments, separate from the NM Angels, which pools the resources of about 70 individuals to provide seed and early-stage capital to companies. But NMA Ventures will work closely with angel members who want to co-invest in startups alongside the fund, said Rader, who will step down as Angels vice president to become managing partner of NMA Ventures.
Rader, 30, will be the youngest venture fund manager in New Mexico and only the second female leader of a locally-based fund.
“We’ll share our deal flow with the NM Angels to work together on investments,” Rader said. “The fund will provide another channel to offer more capital to promising startups.”
The partners will close on the fund in January. They’re raising $2 million in private equity, while also applying for $2 million in matching capital from the state’s new $20 million Catalyst Fund, which launched early this year to help finance early-stage venture funds around New Mexico.
The fund will focus on high-tech startups across the state, but it will exclude life science technology to avoid overlap with another local fund, Tramway Venture Partners, which has already received Catalyst backing for investments in bioscience startups.
“Apart from life sciences, we’re pretty agnostic about what we’ll invest in,” Rader said. “If possible, we’d like to spin out new innovations from New Mexico’s national labs and research universities.”
The fund aims to fill the early-stage capital gap in New Mexico. That’s critical for startups to traverse the financial ravine known as the “valley of death,” where emerging companies need a small amount of capital to further develop and prove their technologies before larger, institutional investors are willing to back them.
“It’s often much easier for a more advanced startup to get $25 million in equity funding than several hundred thousand dollars needed by an early-stage venture,” McCorkle said. “We’re positioning ourselves in that spot where the greatest need is in New Mexico.”
The fund will also strengthen the capacity of local angel investors, who sometimes can’t raise enough individual interest to pool sufficient resources for startups.
“In some cases, we’ll work with the angels to still provide those companies with resources to move forward,” Chavez said.