The State Investment Council is pumping another $97.5 million into two venture funds that will invest in “transformative,” next-generation technology from New Mexico’s national labs and research universities.
The two funds, Playground Global and Lux Capital Management, are focused on accelerating the development of “frontier technology” that can propel industries into the future with cutting-edge innovation in things like advanced computing, artificial intelligence and robotics.
New Mexico has a good pipeline of opportunities in those areas for venture capitalists, thanks to emerging innovation from the labs and universities here, SIC Director of Private Equity Chris Cassidy told council members before they voted to approve the funding on Tuesday.
“Our ecosystem is unique with (abundant) frontier technology, and we’re looking for firms that invest” in that space, Cassidy said. “These are multi-stage funds that invest across stages, from seed-stage investments with smaller checks to growth-stage investments with larger checks…(They) have the firepower to invest in startups and incubate them.”
The SIC approved a $35 million investment on Tuesday in California-based Playground Global, and $62.5 million in Lux, which has offices in New York and California.
Those SIC commitments come on top of $135 million the council approved in November for two other technology-focused venture firms, including $100 million for America’s Frontier Fund, or AFF, and $35 million for two funds managed by Silicon Valley-based Crosslink Capital.
The $100 million commitment to AFF was the largest single investment ever made by the SIC through its private equity program, which channels money from the Severance Tax Permanent Fund into private venture funds that commit to invest in New Mexico companies.
Taking all the recent SIC investments together, the council’s latest commitments mean a minimum of nearly $233 million in private equity will start flowing into high-tech New Mexico startups over the coming years, because the SIC program requires fund recipients to invest – or cause others to invest – at least as much money in local companies as they receive from the SIC.
In fact, AFF is now establishing a “venture studio” in Albuquerque – with satellite studios around the state – that will seek out homegrown New Mexico technology it can develop and market through local startups.
The $35 million the SIC committed Tuesday to Playground Global will be divided into two different Playground funds, including $25 million for early-stage investments in startups, and $10 million for follow-on funding to help grow Playground-backed companies.
The firm focuses on “transformative companies” in four broad technology areas, including next-generation computing, automation with artificial intelligence, life sciences, and logistics and infrastructure, said Playground General Partner Peter Barrett.
One of its companies, for example, is now working to build the world’s first quantum computer to enable much faster and more effective drug development using “industrial-scale” gene sequencing. Another company is applying artificial intelligence to build advanced robotics.
Barrett called AI “just a brain in a jar” unless it’s applied in direct, useful ways to assist industry.
“Our robotics program aims to do useful work through automation and robots that can amplify human capabilities…by stepping into different workforce roles.”
Playground is already active in New Mexico as the lead investor in Universal Hydrogen, a California-based company that’s now pumping $254 million into a global manufacturing headquarters in Albuquerque for breakthrough technology that converts turboprop planes to hydrogen propulsion, employing about 500 people by 2025.
“We’re the largest shareholder in Universal Hydrogen,” Barrett told SIC members. “…That reflects the kind of engagement we want to see in New Mexico. We focus on technologies that can move civilization forward, and we have a pipeline of opportunities were looking at from Los Alamos National Laboratory and Sandia National Laboratories.”
Lux, meanwhile, seeks the intersection of technology and the hard sciences, channeling breakthroughs in the life, physical and computational sciences to real-world applications, said Lux co-founder and Managing Partner Josh Wolfe.
One of its companies, which Johnson & Johnson acquired for $6 billion, used artificial intelligence and advanced software to build surgical robotics that doctors can navigate inside the body without causing scars, Wolfe said. Another Lux company is now developing a microscope that can see inside cells in real time for drug development.
Lux, which launched in 2000, currently has $4 billion in venture investment under management.
“We create companies from scratch,” Wolfe told SIC members. “We want to shine a spotlight on New Mexico to bring investment and talent to the state.”
Lux already has organic ties to the state through Wolfe, who is a Trustee of the Santa Fe Institute, an independent, nonprofit research institute and education center.