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Venture capital firm bets on New Mexico 

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October 18-20, 2023 / Tucson, AZ
The annual summit for research institution gap fund and accelerator programs, including proof of concept programs, startup accelerators, and university venture funds

The Story

When Brian Birk, the managing partner of Sun Mountain Capital, talks about venture investing in New Mexico, his voice projects an almost evangelical fervor.

The man is a believer: “New Mexico is a technically sophisticated place with a very deep talent pool,” he said. “Look at Silicon Valley. There are startups everywhere, but little innovation. It’s more about a new social media idea, a new app, a new way to buy socks online. New Mexico, on the other hand, excels in real innovation.”

You wouldn’t know it by driving by, but housed in modest offices on Don Gaspar Avenue is Sun Mountain Capital, a Santa Fe-based venture capital firm with more than $750 million under management. Much of it is targeted at new ventures in New Mexico, and Sun Mountain claims to have a role – directly or indirectly – in more than 50 companies that employ more than 1,500 New Mexicans.

The firm is the only New Mexico-based investment adviser to be awarded a contract from the State Investment Council, which manages permanent or endowment funds for taxpayers. The SIC money is spread over stocks, bonds, real estate and fixed income by many firms like Sun Mountain that have a small slice of the portfolio. For Sun Mountain, that is $270 million deployed in private businesses throughout the state.

At age 57, Birk still gets enthusiastic talking about his business, often sitting on the edge of his chair and leaning forward to make a point.

“We are not a buyout firm that makes a short-term investment and trashes the company,” he said. “We make long-term investments – five, six, seven years – and stand by the companies we invest in. On my tombstone, I don’t want it to say, ‘He cut 5,000 jobs.’ I want it to say, ‘He created 5,000 jobs that gave families a decent living.'”

Birk began his career at General Electric Co. He moved through the company’s training program and steadily up the ladder, but he wasn’t happy. “I wasn’t a good fit at such a big company,” he said.

So as a next step, he and a few friends started an environmental services company named Mikon. They chose St. Joseph, Missouri, because the U.S. Army Corps of Engineers had a strong presence in the area and the Mikon crew viewed it as a potential customer.

But he knew his options were limited as long as he stayed at Mikon, and he applied to Northwestern University and the Kellogg School of Management, where he received a master’s in business. After finishing, he landed a position with The Boston Consulting Group Inc., where he worked with large corporations on strategy and investments.

But again, Birk found that he wasn’t a fan of working at big companies. And the father of three small children had a more pressing problem: “At BCG, you have to make a choice: It’s either BCG or your life.”

So he and his wife decided to move on. A colleague had a house in Santa Fe, was involved with the Santa Fe Institute, knew of a few business leads in the area and sang the virtues of New Mexico. Soon, the Birk clan was heading west.

Upon his arrival in Santa Fe, Birk was involved with a few early stage companies. That led to his first position in the private-equity world, at Fort Washington Investment Advisors Inc. He oversaw $400 million for the state development funds of Utah and New Mexico.

At the time Birk took over, the fund was losing about 18 percent each year. “From its inception under Gary Johnson, the fund’s approach was to focus on employment and companies that SIC thought could provide jobs. Our approach was different. We wanted to invest in the best companies and the best managers. We knew that if they were successful, they would take care of everything else, including employment.”

One problem, though: Fort Washington is a big company. “I might as well have been back at GE,” Birk said. So he quit, although he did so with the intention of starting his own firm.

Source: Venture capital firm bets on New Mexico | The Taos News

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