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NLGA 2008 Executive Committee Meeting Santa Fe, NM December 2008

State of New Mexico Overview. Manage $15.4 billion in public funds9 members from government and private industry; chaired by the GovernorNM Private Equity Investment ProgramNMSIC Co-Investment FundNew Mexico SBICNew Mexico Film Investment Program. State Investment Counsel. Investment Program

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NLGA 2008 Executive Committee Meeting Santa Fe, NM December 2008

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    1. NLGA 2008 Executive Committee Meeting Santa Fe, NM December 2008

    2. State of New Mexico Overview Manage $15.4 billion in public funds 9 members from government and private industry; chaired by the Governor NM Private Equity Investment Program NMSIC Co-Investment Fund New Mexico SBIC New Mexico Film Investment Program

    3. Private Equity Investment Program In-state Private Equity Investment Program established in 1994 to direct investment monies towards companies based in New Mexico $400 million total program size 26 total private equity funds receiving commitment Side letter requirements are a key component of the Program’s economic development success

    4. Expand Venture Capital Activity

    5. Raising the Venture Profile

    6. Impacting the State Economy

    7. Direct Co-Investment Funds Co-investment funds established to invest directly in qualified New Mexico companies First fund established in 2004 with $46 million Second fund established in 2007 with $90 million Structural features like co-investment and principle place of business requirements are key components of the Fund’s economic development success Top quartile financial performance per Cambridge Associates

    8. Top Tier Co-Investors Proven Access to Top Tier Co-Investors* Partnerships include venture capital firms, private equity firms, strategic investors, and hedge funds

    9. Attracting Outside Capital NMSIC Co-Investment Fund Investment Multiplier

    10. Expanding High Wage Employment NMSIC Co-Investment Fund portfolio companies make a meaningful impact on New Mexico employment Over 1300 employees with Over $100 million in wages paid year to date in 2008

    11. Support Systems in the State New Mexico Venture Capital Association 16 local and regional venture capital firms Coronado Ventures Forum Network for local investors and entrepreneurs New Mexico Angels Organization for qualified angel investors Technology Ventures Corporation Local technology commercialization group

    12. Creation of New Mexico SBIC Began in 2001 with $10MM Expanded over the subsequent years to $47MM Mandate to invest in the equity or debt of New Mexico small business as Fiduciary Program goal to enhance strength and viability of businesses and communities 7 Member Board appointed by Governor No direct investments – Only through partnerships

    13. Create Local Delivery Systems of Capital Lending Partners ACCION NM (Early 2004) $5,000,000 availability Over 1,300 loans, average loan $8,000 Loans in every community in state

    14. Create New Mexico Domiciled Funds Pre Seed Technology funds Flywheel Ventures 4 investments Verge Fund I & I.5 15 investments Founder-like Technology Incubator fund New Mexico Gap Fund 6 investments

    15. Business Financial Education Created www.financenewmexico.org Instantaneous, broadly disseminated, high quality business and capital content 30 newspapers 1,000 blog broadcast All legislators 55 article archive Professionally written

    16. Preliminary Results – 1 Seven equity funds now headquartered in New Mexico with NMSBIC commitments of $35 million Total fund capital managed by funds, $90 million Two second generation funds in the wings Equity Investments in 35 NM businesses Smallest: $50,000; Largest: $3.4 million ½ of companies at revenue stage 4 to 1 multiplier from outside capital 5 companies written off/down No exits to date

    17. Preliminary Results – 2 Approximately $20 million lent to over 1,500 in every community by alternative lending partners Loan losses total $650,000 over 4 year life of lending program Annual loan loss rate of 1.5%

    18. Lessons Learned – 1 Statewide mandate, particularly for equity, very difficult Collaborations and partnerships critical Must partner with professional capital investment specialist/delivery systems Must take long-term approach, NMSBIC really made first investments in late 2003, this is a marathon, not a sprint

    19. Lessons Learned – 2 Government must be a committed partner Economic Dev. Dept. NM Finance Authority NM SIC Administration and Legislators State Incubators Small Business Development Centers SBA USDA

    20. Please Contact Us Sun Mountain Capital Brian Birk 505-954-5420 brian.birk@sunmountaincapital.com New Mexico SBIC Paul Goblet 505-670-1329 thegoblets@aol.com

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