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While economists are looking for green shoots signaling a robust recovery, Los Alamos can now point to a new cottonwood seedling.
Cottonwood Capital Partners, LLC, with offices in Los Alamos and El Paso, Texas, announced this week that it had reached its first closing of Cottonwood Technology Fund.
It will be the first new venture capital fund rooted in New Mexico in several years and the first ever to establish its headquarters in Los Alamos, according to the company announcement.
Bill Bliven, one of the managing partners, said in an interview Friday that the investment fund aims to raise $20-25 million.
“The first close is enough to begin executing our plan,” he said. “As we continue to talk to potential investors about adding to our resources, we can hire support staff to leverage our time. We are evaluating deals right now.”
Bliven said it’s a good time for starting companies.
“We get the benefit of starting in a recovering market, “he said, “and as the economy recovers we can grow into a stronger market than it is now.”
He said that he and the firm’s investors don’t expect the “malaise” that has plagued venture capitalists for the last decade to last much longer.
The cottonwood tree is an apt metaphor for a venture capital company starting up in the Southwest. The tree is one of the monarchs of desert plant kingdom, beginning from a tiny seed that grows rapidly under favorable conditions. Successful cottonwoods need a lot of water to get a start, but they can live for a long time and are resilient to fire and adversity.
Bliven said the Rio Grande corridor from Los Alamos to El Paso now reminds him of the Research Triangle of North Carolina back in the 90s when he was one of the entrepreneurs raising and managing $100 million funds and growing new technology companies during a heady period of growth.
“There was very little money in the southeast in 1995, not a lot of history of success but a lot of experience or support for building companies,” he said.
There are eight primary research centers in Cottonwood’s territory, including the two national laboratories, four research universities with engineering schools and two medical centers.
Cottonwood’s El Paso managing partner Beto Pallares served most recently as executive director of the TransPecos/El Paso Regional Center of Innovation and Commercialization, where he was involved in economic development and reviewing emerging technology applicants for the region. He is working on his doctorate in international business strategy at the University of Texas at El Paso.
Blivin said the company’s emphasis will be on trying to get more money and managerial support to emerging companies earlier. He expects to commit $1-2 million at the beginning, half coming from another financial partner.
Too many companies start with a few hundred thousand from family and friends, another couple of hundred thousand from grants or early investors known as angels, he said.
“The company starts up under funded and not in a position to attract key expertise to the team,” he added.
He believes his links to larger national investment funds will make them more comfortable investing in businesses in an area where they might not have a local office.
The new firm has been nurtured along the way by Executive Director Kevin Holsapple and the Los Alamos Commerce and Development Corporation Blivin said.
Bill Enloe, CEO of Los Alamos National Bank, is on Cottonwood’s investment committee, along with Blivin, Pallares, and Woody Hunt of Hunt Holdings, LP.
“It has been frustrating to be surrounded by all this innovation for so long and see so little of it impact our economy,” Enloe said in the company’s announcement.
Los Alamos takes its name from the Spanish word for the poplar tree, of which several kinds of cottonwoods are sub-species.
The word for the southwestern cottonwood became the root of many other names in the region from Alamosa to Alamogordo to the Alamo in San Antonio.