Investing in 'hard science': NM firm raises $75M venture fund

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Jan. 7—More private investment could soon flow into local startups from Santa Fe-based venture firm Cottonwood Technologies, which just closed on its third fund after receiving more than $75 million in new commitments.

About 40 first-time Cottonwood investors from the U.S. and Europe contributed to the fund, as did most of those who had previously invested in Cottonwood's last fund. That pushed total commitments for Fund III above the firm's targeted raise of $75 million, significantly pumping up Cottonwood's ability to support new high-tech startups going forward, said Managing Partner David Blivin.

"We've now got more capacity to support companies than we ever had before," Blivin told the Journal. "We're in a much stronger position to help startups from beginning to end."

Indeed, Cottonwood's newest fund is larger than the amount raised for its last two funds combined, which totaled about $65 million together. Since launching in 2010, the firm has invested in 21 companies — nine of them in New Mexico — committing a total of nearly $70 million to the startups it supports, Blivin said.

That includes investments made over the past year out of the newest fund, following a "first close" on that fund in October 2020, which allowed Cottonwood to begin committing money from Fund III even as it continued to raise more money for it.

Cottonwood made a total of six investments from Fund III last year, three of them in New Mexico. That included follow-on funding for existing companies that previously received money from Cottonwood's first two funds, plus first-time investments in new startups. Cottonwood, for example, was one of three investors that in December pumped a combined $4.5 million into Albuquerque-based Circular Genomics, a company that launched in February with breakthrough technology developed at the University of New Mexico that uses RNA as a biomarker to diagnose depression and other neurological disorders.

Two more Fund III investments for new companies are now in the works, including one that's expected to close in February for a startup in Colorado, and another in New Mexico.

"We're finding good, compelling investment opportunities here and in Europe," Blivin said.

Cottonwood offers seed and early-stage investments for startups in the U.S. Southwest, and in northern Europe through a regional office in the Netherlands. It focuses on new, "hard science" technologies in everything from clean energy and robotics to advanced materials and the life sciences.

Some Cottonwood-backed innovation in New Mexico includes tiny solar cells made by startup mPower Technologies, compact hydrogen generators developed by BayoTech Inc., and a super-fast cell-screening and analysis technology marketed by BennuBio.

Initial investments by Cottonwood have allowed most of its local companies to further develop their technologies and attract larger rounds of funding from other investors. BayoTech, for example,has raised nearly $200 million in private equity to date.

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