Awarepreneurs Interview - Jon Clark

Hi, this is Paul Zelizer and welcome to AwarePreneurs, the world's longest running social entrepreneur podcast. If you could take a moment and hit subscribe and do a review on your favorite podcast app, it helps our guests help more social entrepreneurs. Thank you so much. Today our guest is John Clark and our topic is New Mexico is Building America's Sovereign Wealth Fund. Let me read you John's bio. John Clark is an Albuquerque native and is the State Investment Officer for the New Mexico State Investment Council, which manages a portfolio of $67 billion for the state. Yes, that's billion, not millions, making it one of the three largest sovereign wealth funds in the country and on track to become the largest in the next five to seven years. The SIC's investments produce substantial revenue for New Mexico, revenue that is now projected to overtake oil and gas as the largest contributor to the State General Fund by 2043.

The permanent funds already contribute more than a quarter of all funding for K12 education in the state, along with more than three quarters of all funding for early childhood programs. And we're going to talk about some exciting things in that department in this podcast. I'm super excited about that. John is also committed to fulfilling the SIC's role in helping build the entrepreneurial ecosystem of the state and the SIC has committed 1.7 billion to New Mexico Focused Venture Capital funds over the last three years. These investments into advanced energy, deep tech, aerospace and defense will help build these economic sectors where New Mexico has a right to win, bringing billions of dollars of additional investment in thousands of high quality jobs to the state with the goal of growing the state's economy and elevating the standard of living for New Mexico residents. Before joining the SIC at the start of 2024, John was deputy Secretary and later Acting Secretary for the New Mexico Economic Development Department and while there launched the Office of Entrepreneurship within the department. Prior to that, John works as a Fiscal Analyst and then Chief Economist for the Legislative Finance Committee for seven years where he specialized in tax policy, revenue forecasting and economic development analysis. John also previously worked with the New Mexico Partnership for more than five years to recruit new jobs and businesses to the state and before that worked with scientists at Sandia and Los Alamos National Laboratories to help commercialize technologies develop at the labs.

He has a Master's in Business Administration and Finance and Marketing from the Anderson School of Management at Unmute. And in his spare time, do you actually have any spare time, John? How do you have spare time after all that? And in his spare time he enjoys Outdoor recreation in New Mexico's beautiful landscapes and weather. John Clark, welcome to AwarePreneurs.

Thank you so much, Paul. I really appreciate you having me on here today.

That is quite a bio. You've been working hard for New Mexico for at least a year or two.

It sounds like, yeah, maybe a couple of decades at this point. But it is a state that I grew up in. I care a lot about, have a lot of family and friends here who are raising their families here. So I want to make sure that this is a good place for them to raise their families.

And we're here to talk about something that can really help move the needle in that arena. John it's called the New Mexico Sovereign wealth Fund, is called the permanent fund. But before we get into the specifics of New Mexico, let's just start at the beginning. What is a sovereign wealth fund and how do they work?

Sure. So a sovereign wealth fund is a dedicated fund that either a state or a country can set up and typically either is funded through surplus revenues that the state or third country has or through a dedicated revenue stream. So in New Mexico's case, we decided as a state decades ago to start putting some oil and gas revenues that the state receives into permanent funds as well as revenues that we receive from use of our state lands throughout our state. And so we manage these funds as well as a number of others. It's a total of 14 different funds that we manage. And the goal is to take this either surplus revenue or dedicated revenue stream, invest it, grow it, and then send more money back to the state year after year.

And remind us, how much are we talking here when you put them all together?

So you got the number right. It's $67 billion with a B. And we are on track to become the largest sovereign wealth fund probably in the next six, seven years. We project that we are going to hit $100 billion by 2032.

And I know from us talking before we hit record at that point, this would be the largest sovereign wealth fund in the United States. Is that correct?

Yes, absolutely. And so that's why we're talking about the Mexico is building America's sovereign wealth fund, because this is going to become the largest sovereign wealth fund in the country. And one thing that we're working on is a plan to rebrand ourselves and start messaging so that if there are international investors who want a trusted American investment organization to piggyback off of where they may not know as much about investing in America and they want to have a trusted source, they will hopefully come to find that New Mexico State Investment Council is that trusted source piggyback off of our investments and that we could become known as America's sovereign wealth fund for these partners around the world. That's great reputationally for us. But what it also means is that when we invest in New Mexico, if these international investors are piggybacking off of our investments, it could bring even more investment here into the state.

So in other words, if this is a values based company or people who are in the business of supporting values based companies anywhere in the world and they want to do business in the US they're probably going to want to talk to New Mexico. Is that, am I boiling it? Like explain, explain it like you would explain it to your grandmother. Is that a fair way to explain it?

That. That's pretty fair. I think it's going to become clear that New Mexico is open for business both at the individual company level, but also for investors who are wanting to, to grow their funds. This is a great place to do it. Great.

And, and you mentioned, John, let's get into the nuances as it exists right now. We're gonna, we're gonna get really excited and talk about where we're going. Cause this is a really exciting time in New Mexico's history. But just again, staying with what's on the ground right now. And you mentioned these 14 different funds give us idea some of those funds of what are they set up to do?

Sure. So one of them is a rainy day fund. Occasionally we have people refer to them all together as a rainy day fund. But really each of the 14 was set aside, set up with a specific purpose. One of them is explicitly a rainy day fund so that if the state suddenly has a downturn in revenues, we have this fund set aside to dip into in order to meet a budget shortfall for the year. But in addition to that, we have things like the Rural Libraries Fund that helps fund books programs and other library programs for kids around the state. We have a higher education trust fund that helps make college education free for New Mexicans. We also oversee the Early Childhood Early Childhood Trust Fund.

And this is providing 78% of all funding for early childhood programming. And it's also going to enable the state's new program that starts next month that provides for free child care across the state. New Mexico is going to be a very unique place in this country where we care for its people. Cradle to career. And these permanent funds that we manage play a significant role in how we're.

Able to do that One of the. For those who don't know New Mexico, I think it is the biggest in terms of just sheer number of humans is our balloon fiesta or balloon festival. And there was a big billboard that went in the paper that was kind of starting to tell the story of New Mexico doing these very unique things, which is free childcare for any family in New Mexico and free college or post high school training. It doesn't have to be a four year degree. It could be a boot camp or a two year degree or trade school for anybody who graduates from a New Mexico high school. And you saw this picture and those of us, I'm not from New Mexico originally, but I got here in 1993. I've lived here longer than anywhere else and pretty much my whole adult life here. Those of us who've been here for a while, it's still like, still getting used to it.

Right. That New Mexico, who we were in 1993 or even 2003 or even 2013, and who we are now, we're changing. Right. And to be the kind of place where we are offering these innovative programmings and beginning to tell the story. And you tell that story to somebody in another state or in another country, you do what for everybody? It's like, yep, right.

And it's pretty incredible. Yeah. New Mexico often is overlooked as a state by a lot of people around the country. And yeah, as you know from your time here, we occasionally call ourselves one of the forgotten 50 states. It is a state that has not had as much economic growth as some of our neighbors, Colorado, Texas, Arizona. But right now we are seeing a level of momentum that I have never seen before in my 20 years of working in and around economic development. It is really an incredible time to be involved, to form businesses, but also just a great time to be a New Mexican. And for the state to have enough money to address real problems and take the state in new directions.

And we have enough funding to solve a lot of challenges that states across the country are trying to solve today. But we actually have the money to be able to do it, whereas a lot of other states are only able to think about it now, just.

Just widening back just for a little bit. So. So certainly this sovereign wealth fund, this 14 funds that are sometimes, I'll brand it as the permanent fund, but it would be more accurate to say the permanent funds, plural. We're not the only state to have a sovereign wealth fund. Right. But there's some unique things about. One is the scale. But also like when you do the per capita equation we're just not that big a state.

So you take a big fund with not that many humans. That's part of the calculus here of why we're able to see some of the impact that we're seeing, is that fair to say?

Absolutely. So there are fewer than 20 states in the country that have sovereign wealth funds.

What kind of scale are some of those other funds?

Sure. So a lot of them are in the single digit billions. There are some that cross into the teens and there are very few that are 20 billion or more. And New Mexico, Texas and Alaska really have this kind of exclusive club of being in the many tens of billions. And it is primarily the western states that have them, that took lands that were given to them under trust by the federal government decades ago. And making use of those lands, New Mexico invented fracking. We invented fission, fusion and fracking here. And as a result of fracking, as a result of New Mexico rapidly going from the fifth largest oil producing state in the country to the second largest oil producing state in the country, we now have this incredible revenue stream coming in where we're able to take it, invest it, grow it even more, and then give back to the state.

And yeah, with 2.1 million people in the state, a $67 billion sovereign wealth fund goes a long way. We can do a lot of amazing things with it. And we're already doing some of those things today, as you mentioned earlier, with the early childhood funding and funding 28% of K12 education in the state.

And those are some of the ongoing measures. And then in terms of our listeners in this, we're a social entrepreneur audience and one of the question that always comes up in almost every entrepreneur circle I know of is how do you get your startup funds right? How do you get your initial capital to get this thing off the ground and get to the point where it's sustainable from a revenue perspective. And venture capital is a big part of that. And that's something, if I understand, right, for the sic, the state Investment council, the venture focus, there's been a more robust attention to that in the, the past little while, is that fair to say?

Yes, absolutely. So we invest across a whole variety of asset classes and trying to get the highest and best returns for the state. But we have made a specific focus of venture capital focused on New Mexico and we've revamped the program over the last two and a half years where we are now able to work with top tier venture capital groups across the country, invest with them, and then say, you know, we're giving you 20% of the value of this fund. In return, we expect you to invest 20% of that total fund value into New Mexico either bringing companies here, bringing projects here. And those fund managers are finding out more and more that there are so many amazing opportunities here. I was just talking with one of these fund managers a couple of weeks ago and he said, honestly, when we first started down this path with all of you, we were a little uncertain whether we would find enough opportunities that already existed in New Mexico to help grow and whether we would find enough good opportunities to bring to New Mexico where it made sense for them to be there. And they have just been so amazed with how easy it is to work with New Mexico state government to get projects going here that they are bringing more and more projects to us all the time. It is incredible to have a state where you have such easy access to decision makers, that variety of levels.

Because we're a small state in terms of population. If a company needs to be able to talk to the secretary at the Environment Department or if they are having a regulation issue, they can talk with the Regulation Licensing Board. You can get access to those people here. And I know in a lot of states the Economic Development Department or the Commerce and Commerce Department and the Environment Department are often at odds. But in New Mexico, particularly because of the types of companies we're trying to recruit, but also because of the atmosphere here within state government, they work hand in hand. The Environment Department here has a full time economic developer on staff and they are fielding multiple calls a week by companies that want to do business here and need some assistance from them. And they're working with them on expediting permitting issues or helping them figure out where best to locate. It's really an incredible partnership.

And so the venture capital funds that we're investing into have really found this to be a surprisingly rich place to invest into and a great place for them to bring and help grow startup companies.

If anybody would like a sense of some of the state leaders that you're talking about, John, I had the honor to interview Rebecca Puck Stare, who's our State Energy Office chair Department and she's amazing, right? Or Representative Meredith Dixon, who I know you know, and just a big footprint in the clean tech and advanced energy. We just did an interview about the Advanced Energy Conference that happened here in September. So those are two examples. Oh, and Representative Andrea Romero, who's also a founder and was working full time in a VC firm until she left that job in VC to go full time in her Own company. She's a founder. Congratulations, Andrea. Doing great work there. So those are three different leaders in our state ecosystem.

I'll put a link in the show note to those interviews so you could hear it from our leaders, not just take my word or John's word for it.

Yeah, you mentioned a couple of our legislative leaders. I think one point that I really want to make is that part of how we're able to do this and how we're growing so rapidly is because of a decision made by our legislators and our governor just two years ago to take some of these excess oil and gas revenues the state has received and put it into the permanent fund so that we can invest it and grow it for tomorrow in 10 and 50 years from now. It is remarkable to have elected officials willing to set aside money that they could have tried to spend today, but recognize the value of growing that money and having it available as a continuing revenue stream is so much greater. And being willing to put that aside, that is hard to find in this day and age. And I really want to commend our legislature and our governor for being willing to do that. Because this bill that they passed, Senate Bill 26 from 2023, was life changing for New Mexico because leading up to the passage of that legislation, we were seeing reports from the oil and gas industry and from the state's economists that New Mexico was going to see a few more years of revenue growth related to oil and gas. And then New Mexico's revenue stream was going to plateau and eventually start to decline. And there wasn't any sign of optimism beyond that.

The situation in fact looked really dire. It was that the state was going to have to come back year after year and figure out what do we cut this year, what programs did we cut, what do we eliminate? And it was frankly a rather depressing look into our future. But as a result of this one bill that the legislature passed and the governor signed, now the projection is that we are going to be providing the state growing revenues at least through 2050. And not only are they growing, but they're stable in a way that New Mexico has never experienced before. We've always been so subject to the boom and bust swings of the oil and gas industry. And now New Mexico has this growing stable revenue source. And beyond that, just being nice to have it also means you can start doing some long term strategic planning that just was never possible before for New Mexico Mexico, where we didn't know what revenues were going to look like 12 months down the road. But as our revenues Become more and more stable because we're supplying more and more of those revenues.

It means the state can start to think, where do we actually want to be in five to 10 years in terms of health care, education, crime, the economy? What's it going to take to get there? And let's figure out a spending plan over the next five, 10 to 10 years to get us there.

Absolutely. Look, John, some of our listeners, our founders and know New Mexico are either born and raised here or been here a long time. One of the questions they asked me to ask you is that going back a little bit with the venture part of the permanent funds, when it goes, when it gets deployed and it goes to, you know, some of the great companies, and I know some of the people on the ground, you know, who received sic funding. People want to know, how do we ensure that funding that gets to a VC goes. You mentioned 20% that any percent goes. Because it's not like there's some binding contract with, you know, a clear statement of consequences if that doesn't happen. Talk to us a little bit about that mechanism because it's a conversation that has a lot of energy and people are, as they find out about the permanent fund, they're like, well, how do we ensure this actually benefits New Mexico Mexico? How do we make sure that somebody doesn't just, like, open up a mailbox and gets a big check and like, they never come back to New Mexico except to get that mailing address? Like, there's a lot of talk about this in the entrepreneurial circles, and there's.

A lot of talk for good reason. When our fund was a lot smaller, when the dollars that we had available for venture capital were a lot smaller, it was a lot tougher for us to try to encourage or direct venture capital groups to invest here. It also was a situation for the last 15 years where money was relatively easy, there was a lot of liquidity. But we've had a combined situation where New Mexico's funds have grown dramatically billions more each year over the last several years. But also their liquidity has started to dry up across the industry. And so now we wield a much bigger stick. We, we do not force the venture capital companies to invest. Instead, our language says you are to find ways to invest into Mexico as long as it does not breach your fiduciary duty.

Do not bring them to New Mexico if it would, if bringing them here would harm the company and breach your fiduciary duty. And so they're only bringing them here if it makes sense. But they are finding time and time again that there are are so many wonderful companies that can thrive here. And the big stick that we wield is they need to have additional series of fundraising and if they expect any additional money from New Mexico sic, then they know that they need to show success here. And that means jobs, it means investment. Not just a mailbox here. We're tracking jobs numbers, investment numbers, and the numbers have already started to speak for themselves. So we, as you mentioned in the intro, we have committed $1.7 billion as part of this New Mexico focused VC program in the last two and a half years.

But just in the last few months we have had $2.2 billion of commitments of projects to New Mexico just in two deals.

Yeah, tell us about those. That's one of the questions. Yes, they're super and I'm a clean tech guy. I'm the co founder of NM Climate. They both happen to be clean tech tech deals. So tell us about those deals.

And, and by saying this is one of our focus industry sectors, clean tech, climate tech is one of a few industries that both makes sense for venture capital and where New Mexico has a right to win. And I think these recent announcements prove that New Mexico has a right to win. So Pacific Fusion announced that they will be building a $1 billion research and development campus for fusion energy. And for any of your listeners who don't know, that is a form of clean and safe nuclear power. It does not have the same radioactive materials that fission traditional nuclear power plants have. This could be game changing for energy development for the world if we are able to figure out how to make it commercially viable. And Pacific Fusion has a good plan for how to make it commercially viable. And they have a lot of scientists on board who think now is the right time.

Now of course being relative, it is probably going to be 10 plus years. But previously this has been something that scientists have been searching for for the last 60, 70 years at least. And now it seems like it may be within reach to actually have viable nuclear fusion power. And so they've chosen New Mexico over competing states, including primarily California, as the location for this fusion energy campus. In addition, we had an announcement from XGS Energy and Meta that they're going to be developing a $1.2 billion geothermal plant in northwestern New Mexico to power metadata center facilities. And so these are just two examples of recent wins where companies realized New Mexico is both willing to make investments. They're willing to put their money where their mouth is, but also it is a good place to do business. And we anticipate more announcements in the coming months.

But we are just thrilled to have those two. And they are great examples of what we're trying to achieve here, where we think we can hit some home runs and really knock it out of the park and put New Mexico on the map. For if you want to be involved in advanced energy, if you want to be involved in climate tech, this is the place to do it.

Absolutely, John. And together, just those two projects, we're talking hundreds and hundreds of jobs, even after. It's probably thousands in terms of getting them built, but even after the physical plants are constructed, we're talking hundreds and hundreds of jobs in an ongoing way. Yeah, beautiful.

Absolutely. Yeah. Thousands of construction jobs and many hundreds of ongoing jobs.

Yep. It's super exciting. And so one other question that's coming from, again, the community. Right. People who are saying, Paul, when you talk to John, we need to ask him a few about this. Right. And this is something you've heard before. So there's a lot happening in New Mexico, and I'm excited about.

You're excited about it. To be fair, New Mexico hasn't always been the easiest place to live for a significant portion of our residents. Economically, our GDP is less than most other states. Educationally, our outcomes have been low, although there has been some improvement of late. But that's very resource. Right. Historically, this has been a place where most of the indicators, you don't want to be at the bottom of the list. We've been at the bottom of the list.

Right. And that's been true for a very long time. And as people are hearing about the permanent fund and Thus the scale, 67 billion, there's only 2.1 million of us, as you said, we have the resources to move some needles. One of the conversations that is out there is about why wouldn't New Mexico be even more robust and proactive about leveraging some of these funds to move the needle? Because people are suffering now, and some people who are suffering might not be able to wait 5 or 10 years or 20 years for this flywheel to kind of pick up speed. Why wouldn't we make a bigger investment? Not all of it, but some chunk. I've heard the number of 15 to 20% thrown out. Right. Why wouldn't New Mexico do that? What would you say to somebody who's asking that question?

Sure, we hear that fairly frequently. And I think the issue is just that we haven't done enough work to get out there and educate people on what we're Already doing there is the thought among some people out there that the money is just sitting there. We do invest it in growth, but we are also sending it back to the state this and every year. This year, for example, we're already sending $2.6 billion back to the state, but that number is growing dramat radically year after year. So the, the issue here is, is twofold. One is just that we need to do a better job of telling people we're already sending lots of money back to the state. And I'll give you a better idea of what that the magnitude of that is in a minute. But the other is that it makes a dramatic difference for New Mexico's future and our ability to provide for New Mexico's future.

If we take money, some of the, the portion of the additional investment returns that we get versus taking a lump sum out of the corpus of the funds. And I, I think it, it's often hard to think about investment returns when you're talking about billions of dollars for some nebulous entity called the State Investment Council that maybe you've never heard of before. So the example that I try to give about the power of compound returns is to think about your own retirement savings. And, and if you, if you have two individuals say Mary starts saving for retirement at age 21 and saves $1,000 a year for 10 years. John starts saving for retirement at age 31, also saves $1,000 a year, but he saves for 30 years. By the time they hit 65, John has saved a total of $30,000. Mary has only saved $10,000. But because of compound returns and because she started sooner, Mary has more money than John does upon retirement, even though John saved three times as much.

If we take money out of the corpus of the funds now, it significantly diminishes our ability to get those compound returns and provide for money down the road. So that's part of it is we. This really is an incredible function. There's a quote often attributed to Albert Einstein that compound interest is the eighth wonder of the world. Now, I could not find documentation that he actually said that, but the compound returns are pretty remarkable. And this is an opportunity for the state to care for its current generation and the generations to come. And in terms of what we're providing for tomorrow, not decades down the road, we're projecting that over the next 10 years we'll be sending $38 billion back to the state estate. We've heard numbers being thrown out of.

Well, what if we took, you know, $30 billion out of the permanent funds and used it over the next 10 years? Well, we're, we're already doing that. We're going to send you more than $30 billion over the next 10 years. We're going to send you $38 billion. And so that's really a message that we have not done a good enough job of getting across the magnitude of the money that we are and are going to be sending to the state. And this is also a message to policymakers at the state level. Be prepared for this and start thinking strategically about how you're going to plan to use that money over the next five to 10 years. How are you going to come up with plans to address all the critical issues that New Mexico faces and you can actually plan for it again in ways that you just never could before when we were so subject to the boom of that bust cycle of oil and gas.

The legislature, I'd like to have that problem rather than what are we going to cut. So, you know, thank you for your work and yeah, get ready legislatures and representatives and that's a luxury problem to have. I'm glad we're going to have that problem. So let's do this.

Mexico has this luxury problem and it really means that we can make not just incremental but significant progress. You were spot on that New Mexico, for too much of its history has fallen at the bottoms of rankings that you don't want to be at the bottom of. And now we have the capacity to make real changes and pull ourselves up and become a leader in of areas.

Yeah. So let's do this in a minute. I want to get back to our title, which is New Mexico's Building America's Sovereign Wealth Fund, which we barely touched on. I want to come back to that larger picture as well as a few specific things that are happening here locally. Before we do that, I just want to take a quick break and hear a word from our sponsor. If you're an impact driven founder working to raise capital or grow your clean tech or social enterprise and you're feeling the strain of doing it all yourself, I want you to know there's another way. Over the past 18 years, I've helped purpose driven founders build traction faster through fractional business development and capital raising support. I've also interviewed more than 300 of the world's most accomplished social entrepreneurs and climate tech innovators on the AwarePreneurs podcast, giving me a front row seat to what truly works when it comes to impact and scale.

When we work together, you don't just get a consultant. You get an experienced professional on your team who's helped build hundreds of impact ventures and gain access to a robust global network of investors and partners who can accelerate your progress. So if you're tired of starting from zero and trying to figure it out alone, let's talk. You can move faster with integrity and clarity by bringing on an experienced professional without the cost of a full time hire. If you'd like to learn more about my fractional business development and capital raising support, please reach out to me at www.paulzelizer.com. welcome back everybody. I am here talking to John Clark and our title today is New Mexico is Building America's Sovereign Wealth Fund. And John, right before the break, I was just saying I want to get into that America's piece and that positioning New Mexico and this particular fund in a both national and global perspective.

Before we do that, I know that you've been thinking a lot about New Mexico and the positive impact of how the sovereign wealth fund can make a difference. And we've talked a little bit about economics in terms of the various initiatives. The educational impact in terms of, you know, from cradle to career is what you talked about. From free childcare all the way up to free college training or trade school training for anybody who graduates from a New Mexico high school. There's some other areas that we haven't touched on yet. Before we jump nationally and internationally, is there anything else you want people to know who you know, care about New Mexico, about what does the way the SIC and the way our legislature is current currently planning in these new ways? You gave one example only two years in certain aspects of the economic development part of this. What do you want people in New Mexico to know in addition to these two important buckets, which is economic development and education, how else are these funds being managed to make New Mexico a better place?

Sure. So we manage every fund individually. We have a risk return profile that differs for each one because some of the funds need to be more liquid, others can take on much less riskier profile because they have longer term vision. What the legislature I think has wisely done over the years is to set up a number of these additional funds. So of our 14 funds, nine of them are new within the last five years. So we just had five funds before that. And this really was visionary for New Mexico to realize when we started getting all of these significant surplus oil and gas revenues coming in that this was a chance for us to to not just save for the future, but provide for continuing funding streams for important programs And I think that's something that we haven't done a good enough job of telling a story of is it's not just saving for the future, it's providing continuing funding streams where the money going to support these early childhood programs, to the rural libraries, to Water Trust for.

Water and some of the land programs that are in place. Those were two of the ones I was thinking of. Talk a little bit about like if I'm somebody who's passionate and we're a desert state. We're a high desert state. Right. So water, give me an example. How are the decisions and the that fund that's focused on water, how do you see what the decisions that are being made now? How is that going to improve the situation for somebody who's really passionate about water? Renewable Mexico, Sure.

So the funding that we're able to provide for water in New Mexico is going to be significantly towards doing research and development testing to figure out how can we take the incredible reserves that we have of non potable water under our surface and being able to make that either potable or make it at least usable for industrial purposes where industry then can use that instead of potable water sources. Because that really is the future for the state. It is I think a little known secret how much water New Mexico actually has under its surface. We have incredible water reserves. The problem is that most of it is non potable. And so with this funding stream coming out of this reserve fund that was set up, we can do research and development and testing to figure out how do we take that and how do we make it usable. How do we either directly provide potable water or how do we provide offsets so that we can use this for industry and stop using potable water for industry and use it for homes, residences, commercial buildings.

Beautiful. So let's go bigger. Right, let's look at. So we're going to find ways for people to get additional resources who care about New Mexico and reach out to the SIC office if they have questions. Let's go to that America's part of our title today. And there's a quote here from one of the articles that your staff sent over to me as I was reading meeting. And the quote is we're talking about the permanent fund and what it means. And it says the largest targeted deep tech venture program in the U.S.

right. Think about that listeners. The largest targeted deep tech venture program in the US So I thought that was a good entryway into what we're talking here. And this is your office speaking to one of our Local press. Right. The Albuquerque Journal, you're talking about it in that way.

Way.

Like what does that even mean? Right. If I don't know what deep tech venture program is, what is that and what does it mean that this little state that most people thought of as an anemic economy and in the past they would have been right and is now got the largest venture program in this very important area in the entire country?

Sure. So I'll start with where deep tech comes from and why we're targeting deep tech. I think most New Mexicans know that we have an incredible resource with our national labs, but even many New Mexicans might not know that New Mexico has a higher concentration of PhDs than any other state in the country. We have more PhDs per capita than anywhere else. And we do incredible deep tech research both at those national labs, at other research institutions, at nonprofits, at companies that absolutely has been a focus of New Mexico for decades and decades. And what we have not had was a robust venture capital program to leverage that and build companies out of it and have them succeed here. What we have sometimes had in the past was startup companies that would form off of those deep tech technologies able to raise the first couple of rounds of fundraising and then have to leave. Because the way venture capital works, for any of your listeners who aren't familiar with venture capital, you don't just do one and done.

It's not okay. I went out, raised my money, I'm good. It's, it's a series and it goes from precede to seed. Yeah. All the way to series A, B, C. And so you need a venture capital ecosystem that is able to support that. Historically, before this revamp, New Mexico didn't have that. And we lost companies that hit certain stages, hitting certain sizes, raises, weren't able to raise the capital that they need and left.

Well, now we've committed enough capital to enough amazing partners that we can provide capital all throughout that, that life cycle of a company. And because we have revamped the program with a focus on top quality managers, focusing on building the best possible companies and locating them here, we are starting to see a lot of interest from venture capital groups who probably would not have picked up the phone for us just three years ago, now they're starting to see all this incredible activity in New Mexico and they're wondering, well, what's going on there? I need to pick up the phone and find out. So we're even getting approached by organizations that may not have picked up the phone for us three years ago. Ago. So for deep tech it is, it's a variety of fields. It includes things like AI and Quantum. And the Mexico really has an amazing prospect in terms of Quantum. The Mountain west as a whole is a very promising sector geographically of the US in terms of quantum technology research and development.

Our national labs have done a lot of work in that space. New Mexico formed a partnership with Colorado a couple of years ago to be partners in this space of developing quantum research. And we have now made some significant investments into this field as well. And we think that Quantum really has the potential long term to be as game changing as AI seems to be today and tomorrow.

Yeah, well, you were describing that dynamic where companies grow to a certain point and then hit a wall in New Mexico, John. I've heard that called the Valley of Death. And sometimes it's a literal death. Some companies have moved. We've also lost, lost so many like just dead in the water and people burned out and left and just, you know, walked away from the company that was very promising and was getting good results. But it was just, it was time to end because the infrastructure wasn't in place. They had started here and it just, they, they didn't want to uproot their families or it just, they were burnt out. Right.

So, so the Valley of Death could be a literal death. And we have lost a lot of companies in New Mexico or we lose them to another place where the capital, there's just a lot more of it, whether that's to California or New York or Austin or something like that. The number of companies. A matter of fact, I was talking to some entrepreneur friends. If you're talking about venture capital, what everybody's looking for is a unicorn, right? What does a unicorn mean? Right. A company that gets to a billion dollars or more. Right. In the entire history of New Mexico go.

Unless we're missing something, we think there's one. And it took decades to get there. Right. That's Array Technologies, another clean tech company. Yay, clean tech. But we haven't done a great job of. We have incredible people, more PhDs than anywhere. Incredible technology.

We'll put our technology up with the best of the best. But our ecosystem to be able to support from like the version of cradle to career, right? Like that full like from the moment a company is, you know, born and it just a spark in an entrepreneur's mind to the moment that it's a billion dollar company and they've got this huge inflection of cash because they just sold it and they need to turn around Invest it or get hit with really major tax bills. Right. Which is what? You know, if you think of a San Francisco or a Seattle or any London, any big startup sector, that's what happens. You get that flywheel going, you get a few big win and then those entrepreneurs turn around and mentor and invest in New Mexico's. Literally never have that. Right. And a big part of it is what you're describing and what I think I hear you saying.

Tell me if I'm putting words that don't belong in your mouth, that we're being really intentional about that value. We're acknowledging it and saying we need a better vision of from the moment a company starts, they're going to need certain things, incubators, accelerators, mentors, leadership, some startup capital. And then when they're at a series, you know, when they're at a seed round or a series a round, they're going to need larger checks, they're going to need. Talent's going to be a bigger issue. There's going to be different needs depending on where they are. And we're taking that on in a much more mature and honest way than we've been able to in the past. Is that fair to say?

That's entirely fair and used a word there, mentor. And I really want to hit on that a little bit more because I talked about how we are providing, able to provide through our partners, funding across the life cycle of a company. But there are other important considerations too, and mentorship is another one. New Mexico does not have a deep bench of experienced entrepreneurs who have built VC scale companies. And so when I was at the economic development department, one thing that we were struggling with was how do we get mentorship for these people people? How do we take New Mexico's entrepreneurs who have amazing ideas and provide them with some guidance of how to take that amazing idea and turn it into a successful company? Well, that is another function of working with these top tier venture capital groups. They've been there, done that. They know how to take a startup and turn it into a successful company. And so it's not just the funding that they're providing, they're also providing mentorship to these entrepreneurs along the way way and making national connections for them which is so key to be able to access supplier networks and markets as well as peers across the country.

So really it's the whole value chain of everything that's being provided now that wasn't happening before beyond just the dollars that are going out the door.

Absolutely. Couldn't agree more, Don and I get to be in conversation, especially in my role in cleantech and also on the talent end of things as a co founder of NM Tech Talks and doing events to engage young people and say, hey, let's put tech careers on your radar because there's really cool stuff happening here and you don't even necessarily have to go get a four year degree or PhD. You can go do a boot camp at CNM and 10 weeks later you've got a great career, getting paid, really good money, as long as you are really active in that educational process. So anyway, I'm on the front line lines building things. Some of the people you're talking about are sponsors for TechTalk educate. They're showing up. We're doing a climate focused hackathon for NM TechTalks in two weeks and that's going to be at the builder's VC office, right. Which is opening in downtown Albuquerque.

And this is going to be their sort of big first event. But they're one of the very skillful VC partners that are new to New Mexico. They're opening an office here and they're like, come do programming here. Like, we don't just want to write tracks. We want to be part of an ecosystem, mentoring people, building things together. And so I'm just telling that story to say I'm seeing that in a very exciting and granular way. So if there is a VC leader that's listening to this and saying, okay, I've been hearing about New Mexico. If you're a VC leader and you know the new Mexican Mexico story, please send this to a VC friend who doesn't know the story so that we can get more folks familiar with what's happening here.

And if you're one of that second group, like, all right, I'm not already super familiar. I like what I'm hearing here and I want some more information. Like, we've been doing this a long time, we have some great results. $67 billion that got my attention as a VC. Right. And I want to see more about how we might play with what's happening in New Mexico. What would you say to somebody who's in that leadership role?

Sure. I say reach out to our team because we are fielding these requests day in, day out. It is remarkable the increase in interest that we've had from funds wanting to work with us. I started here with the New Mexico State Investment council January of 2024 and now a little over a year and a half later, the increase in the number of inquiries that we get of funds Wanting to work with us, and I would say in particular venture funds, wanting to work with us is absolutely remarkable. And what it means is that we get to work with a, a great diverse set of fund managers, but it also means that we, we get to work with the, the absolute best managers out there. And that is fantastic because that is going to lead to more successful companies here in the state. So, yeah, if any venture capital funds have, you know, top tier results, want to reach out to us, please, you know, visit our website, look us up, you know, NMSIC and reach out. We'd love to talk to you.

Great. And I'll put a link in the show notes of how to get a hold of that website. So, John, for New Mexicans or anybody who's excited about the New Mexico story, whether you live here yet or not, maybe you got it on the radar that I might want to wind up up here, you're in a seat to kind of get a glimpse of the future and participate in the conversation in a way that not everybody is. Right. Not everybody's in a leadership role for a $67 billion group of funds. Right. If you are, feel free to reach out. We'd love to talk to you.

Right. If you are, and your name's not John Clark. But give us a sense like 10 years from now you're seeing things and you've acknowledged and I agree. Matter of fact, I just had a Congress call yesterday about New Mexico needs to get better, telling our story. And thank you for doing this podcast. This is part of that effort. I heard you talk about that again before we hit record. So thank you for doing this.

And you're seeing things that people haven't had on their radar. They haven't been dreaming, they haven't been in the hard conversations, they haven't been planning like you have 10 years from now. If we stay with the path that's being mapped out for us now, what the SIC is doing, what our leadership is doing, obviously things can change. But if we go in a fairly similar direction, how is no me, how is New Mexico better? How is it different 10 years from now on the path we're on to.

Start first with the output and then the outcome so outputs, you know, by then we should have sent an additional $38 billion back to the state. I would also be a little surprised if 10 years from now New Mexico is still doing annual budgets. I think there's a very reasonable chance that by then we'll be doing budgets every two years. And for a lot of your listeners who aren't part of state government. Why does that matter? Well, the answer is there is so much that goes into the year, turnovers for state agencies that you have to shut down. A lot of things get delayed. Having a single year budget cycle really means you probably get about 10 months of actual real work done and then two months just working on the changeover from year to year. If we go to a two year cycle, then that provides for better midterm.

Not long term yet, but midterm planning by those state agencies. But also then you've just cut in half the number of months that are spent just dealing with the fiscal year turnover. So you get more efficiencies from state agencies across the board. Suddenly they're able to plan out a little farther, farther. And then if you couple that with the legislature and the, the governor starting to do some real long term planning of where do we want to be in 10 years, how are we, how are we going to get there? And can we start putting in place projected budgets for those things along the way? We really could turn this state into the gem of the United States. I don't think there's any reason why we can't become that. Where we start to top the charts on educational outcomes, outcomes on crime, health care, those are actually going to be achievable. Not immediately, they take time.

But I think in 10 years we could start to see real changes in those metrics and we could start to get noticed nationally for those changes.

John's a huge topic. It's a huge amount of money. There's a lot of feelings about it because it's such a huge amount of money. And, and it's an exciting vision. But also there's been a lot of suffering because we have had an anemic economy. We could, we could spend days. You, you've spent years thinking about this, right? And I know you're busy. I know our listeners are busy as well.

If there's something we haven't yet touched on as we start to wind down that you want to make sure we cover before we say goodbye or just something you want to highlight as we're saying goodbye, what would that be?

I would just say I want to convey a sense of hope because I was an economist for years. I saw the forecast for oil and gas revenues for the state. I saw what was likely to happen and it looked pretty dark for the state. But now, because of decisions made by our elected leaders, we really have a very different future on our hands. And I have a sense of hope to an extent that I've never had before. And I am so encouraged about where New Mexico is going.

Thanks, John. John, if somebody wants to get a hold of you, they're a fund, they're an entrepreneur. Needs more information. What's the best way to get a hold of you or your team?

Easiest way is just go to our website sic.nm.gov great.

So listeners, again, I'll put a link top of the show notes. John, thank you so much for all the work you've been doing and for sharing it with us on this podcast.

Thank you so much Paul.

So thanks everyone for joining us. And a big thanks to John for the courage to do this work. It's exciting, it's, it's complicated. There's a lot of opinions. When you get to 67 billion, I can only imagine how many opinions you hear, John, about what should happen and on the timeframe it should. To our listeners, if this episode stirred something in you and if $67 billion being used for positive impact didn't stir anything in you, you're listening to the wrong podcast. But if it did stir something with you, I know you know somebody that you can share it with. Please help us get the message out, tag them, share it on social media media, put it in your newsletter.

Let's get the word out. Lastly, I just want to remind you, if you're ready to develop a bold strategy for your impact business, consider one of my strategy sessions. You can learn more about that@paul zelizer.com until next time, please keep working for positive impact and letting your values guide your business. It.