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SIC commits $10M to new venture fund

SANTA FE – The New Mexico State Investment Council approved $10 million on Tuesday for Sierra Ventures of California, a Silicon Valley giant that plans to establish a local office for investments in New Mexico startups.

Its the first such SIC commitment since 2008, when the recession forced the council to freeze new contributions to local venture funds through its Private Equity Investment Program.

But in January, the council voted to restart that program, authorizing up to $40 million per year for new commitments.

Sun Mountain Capital, which advises the SIC on the program, recommended Sierra Ventures because of its broad reputation for building technology startups into large, successful companies, said Sun Mountain Managing Partner Brian Birk.

“Sierra Ventures is one of the leading Silicon Valley venture capital funds,” Birk said. “It has a 30-year history of early-stage technology investments, and it’s considered one of the very top brands in the venture capital industry.”

Sierra Ventures has managed more than $1.5 billion in investments from nine funds since launching in 1983. It led 35 of its portfolio companies to successful initial public offerings, some of which are now multibillion-dollar corporations.

The SIC commitment is part of a new, $150 million fund Sierra is raising to invest in early-stage technology companies in mobile communications, social media, video, cloud computing and energy efficiency.

Sierra will invest in 15 to 20 startups, although only some of them will be in New Mexico.

Under the private equity program, venture funds that accept SIC money must invest in local companies, or encourage others to invest, at least as much as the SIC’s commitment to the fund.

“Typically, SIC investments in venture funds generate six times more investment in New Mexico, or in this case, about $60 million,” Birk said. “But with a firm like Sierra, which has co-invested with many other venture capital funds over the years, I expect the investment multiplier could be even higher.”

Mark Fernandes, a managing director for Sierra’s new fund, said Sierra is already involved in one New Mexico company, water purification firm MIOX Corp., which received more than $8 million from Sierra since 2007. In addition, Sierra has looked at about 20 other local companies for potential investments.

Seven of the SIC’s 10 members approved the commitment to Sierra. Gov. Susana Martinez, who chairs the council, and two other members were absent.
— This article appeared on page B01 of the Albuquerque Journal