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UNM’s Graduate and Professional Student Association Lobby Committee is working to pass new state legislation that would give recent graduates a leg up on funding for their in-state businesses.
The Statewide Entrepreneurial Economic Development (SEED) Act would create an appropriation for investments on behalf of the state by using a portion of funding from the state, said Luke Holmen, research chair of the Lobby Committee in a GPSA meeting Saturday.
The money would come from the New Mexico Private Equity Investment Program, Holmen said. An administration would be set up with representatives from UNM, New Mexico State University and the New Mexico Institute of Mining and Technology to direct the funds, he said.
“What we are doing here is we are trying to target recent graduate students to keep them in the state and to foster economic growth in the state,” he said. “So, anybody who has graduated with a bachelor’s through professional degree, including Ph.D., would be eligible if they have graduated in the last five years from one of those three institutions.”
The SEED Act would use 0.5 percent of the $202 million from the New Mexico Private Equity Investment Program, amounting to about $1 million annually. Recent graduates must be owners, co-owners or partners of a New Mexico business that already exists to be eligible for funding, Holmen said.
The funds would function like a stock, with the state investing in the company, Holmen said.
“(The state) would buy a portion of the company,” he said. “And hopefully the company is successful. So hopefully, the state makes money, and the recent graduates are given opportunities to succeed.”
The State Investment Council, a state organization that decides how to spend the state’s money in order to create more jobs in New Mexico, runs the investment program.
But Holmen said the New Mexico Private Equity and Investment Program has not been very successful so far. Between 1993 and 2004, the program lost 18.2% of the money the council invested, and 3.2% between 2004 and 2010, according to the 2013 Q2 investment review of the program conducted by the state.
“The point of that is that the state isn’t making very good investment choices with its money right now,” he said. “So, we are hoping that we can provide and be aware that we can actually make money and … there’s research that shows we can have that.”
Other universities around the nation have similar programs which have been very profitable, according to a 2010 study by Oxford University. In the 13 universities surveyed, the programs started with a combined $19.4 million which was increased, through investments, to $39.8 million in 2010.
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However, the survey was conducted on student-run ventures, while the SEED Act would be headed by state organizations.
“The point is that these types of funds have been very successful, much more successful than the average venture capital investment programs in the nation right now,” Holmen said.
The bill is being reviewed by legislators at the New Mexico Legislature, Holmen said. They are looking for sponsors of the bill, as well as stories of graduates who now run successful businesses or graduates who would be successful with this type of program, he said.
The Lobby Committee has between 10 to 12 members, and will be sending members up to the Legislature each day during the session to lobby for the bill, Holmen said.
The 2014 legislative session begins Jan. 21 and lasts through Feb. 20.
Holmen said the act will be successful because it dovetails nicely with existing organizations. It will also supplement Innovate ABQ, a proposed technology and business entrepreneurial incubator that the city of Albuquerque and UNM are putting together.
“We think that universities are a good pick to administrate these funds because they represent a culmination of business and tech transfer and science experts,” he said. “We have several institutions that are already set up at each of these universities that would be able to probably provide representatives that would help us manage this funding. So the expertise is really at the university level.”
