SIC-backed venture fund launches with focus on New Mexico’s energy and mobility sectors

After moving to New Mexico over three years ago, Brian Adams thought he’d spend the rest of his career working for startups remotely.

That was, until he read a November 2022 Albuquerque Journal article titled “State Investment Council invests record $100M in high-tech venture initiative.”

“That headline on that day changed my life forever,” Adams recalled. “I made it my mission to figure out what the New Mexico State Investment Council was — I had no idea.”

The article would become the catalyst for Adams, the managing partner, and General Partner David Ellmann to co-found UP.Abundance, a venture fund dedicated to innovation in New Mexico’s energy and mobility sectors. The newly formed group is a branch of global investment firm UP.Partners.

Backed by the SIC and officially announced at Wednesday’s UP.Summit in Bentonville, Arkansas, Adams said UP.Abundance received $20 million for its first fund and, at this time, can write checks of up to $1 million to startups of all stages.

SIC Director of Private Equity Chris Cassidy said the agency, which manages the state’s $66 billion sovereign wealth fund, also oversees the “strategic venture capital program” where groups like UP.Abundance and Roadrunner Venture Studios get their funding.

Cassidy said the program evolved out of a strategy the SIC has had for over 30 years, originally intending to promote tech transfer and commercialization from the state’s national labs and universities. Admittedly, he said, it hasn’t worked as well as the agency hoped. Rigid rules outlining what counted as a New Mexico business were among the biggest challenges with the first formula, specifically a requirement that companies be headquartered here.

“The big change that we’ve made is to really make that definition more flexible and really focus on economic impact in terms of job growth and stuff being built in New Mexico,” Cassidy said. “At the end of the day, just because a business isn’t headquartered here doesn’t mean it can’t have a dramatic impact on the local economy.”

This new strategy, Cassidy said, focuses on sectors where the SIC feels New Mexico has a “right to win,” like deep tech, climate tech, defense and, most importantly, advanced energy.

With previous experience in launching his own startups, Ellmann said he and Adams felt New Mexico was at the epicenter of the advanced energy sector — be it wind, solar, geothermal, nuclear fusion or other renewables. Together, they look to invest in companies that have, or will, commit to establishing a presence in the state.

“All we hear over and over again is, ‘I never thought about New Mexico before, but that sounds like a really good opportunity.’ Then, we really go deep with them and explore connections,” Ellmann said. “So we try to do these two jobs: find great startups and also help them figure out if they can thrive here.”

The UP.Abundance team and Cassidy agree that there has to be a “double-bottom-line” when it comes to investing in and bringing businesses here. Essentially, Adams said this means they want all the SIC money deployed into venture firms to produce incredible returns to the agency and New Mexico.

“We identify 100 new startups a month; we probably engage 30 to 40 directly a month,” Adams said. “Some of those conversations stop after one conversation, and some of those manifest in us investing in the company.”

Cassidy said groups like UP.Abundance are a core part of the SIC’s strategy of “evangelizing” that New Mexico is a place for conducting business.

“They are basically going around the country and the world and saying, ‘We think New Mexico is one of the best places in the world for you to build certain types of businesses — how can we help you make the decision to be here?’” Cassidy said. “I would say that has been one of the missing pieces historically.”

‘A portfolio that represents the depth of work’

While gearing up for Wednesday’s announcement, Adams said UP.Abundance was working in semi-stealth mode as it made six investments totaling around $4 million. Funded startups are in stages ranging from early to established. This was intentional, he said, to show the venture fund is “stage agnostic.”

“We meet founders, we tell them what we’re doing. When we meet people in the community, we’re telling them what we’re doing,” Adams said. “We wanted to build a portfolio of these six companies that represent the breadth and depth of the work that we want to attract to New Mexico.”

The companies getting funding include:

Pacific Fusion: A California-based nuclear fusion energy company that last week announced it would build its $1 billion research and manufacturing campus in Albuquerque’s Mesa del Sol.

Space Kinetic: An Albuquerque-based startup focused on space superiority and missile defense. The company recently raised $12 million to advance a payload development system prototype, to which UP.Abundance contributed.

Reliable Robotics: A California-based company specializing in autonomous aircraft systems.

Ashbrook Technologies: A livestock insurance provider utilizing climate resilience. Based in California, the company recently relocated to Albuquerque.

Eli Technologies: A California-based, early-stage startup focused on streamlining rebates, tax credits and financing for home energy and electrification projects.

Stealth Startup: A California-based company domesticating the supply base for physical artificial intelligence.

Attempts to commercialize technology from national labs and build out companies in New Mexico are now coming to fruition, Ellmann said, just in a different way than originally planned.

This is especially true for businesses like Pacific Fusion, he said, which bases a large chunk of its work on research done at Sandia National Laboratories’ Z Pulsed Power Facility, as well as XGS Energy, a geothermal company that announced plans in June to build a power plant in northwestern New Mexico, using technology developed at Los Alamos National Laboratory.

New Mexico is “teeming with potential,” Ellmann said, and UP.Abundance is spurred by all the venture capital funding the SIC is deploying.

“We named our fund UP.Abundance (because) we really think New Mexico can be this land of abundance, abundant clean energy, abundant venture capital opportunity, great jobs for the 2 million folks who are here and the many millions to come in the future,” Ellmann said. “It just feels like we’re at this incredible moment.”