A national venture firm with a focus on "deep tech" investments is lining up deals in New Mexico after closing a $150 million fund and committing a chunk of money to a quantum startup with ties to the state, two of its partners told New Mexico Inno on Thursday.
J2 Ventures, launched by managing partners Jonathan Bronson, Ph.D., and Alexander Harstrick in 2020, announced the close of its second investment fund, dubbed the "Argonne Fund," on July 4.
That close came just over a month after the New Mexico State Investment Council (SIC), the state's sovereign wealth fund, approved, on May 28, a commitment worth up to $15 million to J2 Ventures' Argonne Fund.
The SIC's commitment is one part of J2 Ventures' spotlight on New Mexico, Yeri Lopez, one of the firm's partners, said. Other financial institutions, including J.P. Morgan and MetLife, put money into J2's Argonne Fund, the firm's second after raising an inaugural $68 million fund in 2021.
Its existing portfolio includes Ōura, a Finnish health tech company behind the popular Ōura ring products, and Apex Technology Inc., a California space tech company that's received backing from other big-name investment firms like Andreessen Horowitz. J2 Ventures' particular investment thesis surrounds technologies with private sector and national security applications — without investing in "guns, weapons or things that hurt people," according to an SIC presentation.
Besides Ōura and Apex, one of J2's other recent investments went to Mesa Quantum, a startup developing "chip-scale" atomic clocks based on a "material science breakthrough" at Sandia National Laboratories, Bronson, one of J2 Ventures' managing partners, said.
"They worked with Sandia to get the technology," Bronson said. "Once we heard about it, we thought it was just extraordinary."
Mesa Quantum, which Bronson added is considering establishing operations in New Mexico, provides an example of the type of company he and Lopez said J2 Ventures invests in — a company with advanced technology that could have applications in both the commercial sector and with federal customers.
There's a lot of potential for developing such startups — typically referred to as "dual-use" because of their applications in both the civilian and military sectors — in New Mexico, Lopez added. That potential, plus the tie-in through the SIC commitment, has made J2 place a focus on the state.
"If you look at locations globally and nationally that have deep tech, this is one of the highlights," Bronson said about New Mexico. "It's also still one of the places … that's almost yet to be tapped into, so that you don't have the same level of people that are aware of what's going on. We want to bring that level to [the state]."
While J2 Ventures has five partners currently, including managing partners Bronson and Harstrick and partners Lopez, Christine Keung and Matt Goldman, Lopez, whose background includes national security work and a stint at Microsoft, is the firm's point person in New Mexico.
Lopez's earliest job, he said, was as a Peace Corps volunteer. He said he wants to bring the Peace Corps model, based largely around boots-on-the-ground partnerships, to J2's work in the state.
"It's one thing for me to say, 'New Mexico may need X,' but if that's not what you guys are telling me, then it's largely irrelevant," Lopez said.
Through his experience in the state to date, Lopez said he's heard lots about the potential for deep tech innovation but challenges surrounding how to "business-alize" that potential.
There's also a need, he said he's heard, to help more folks in the state understand how venture capitalists think about investments, especially investments into deep technologies that are often more capital-intensive to commercialize.
In terms of J2 Ventures' own investment process, Bronson, one of the firm's managing partners, said market attractiveness and technological validation are two key factors J2 looks at when determining whether it'll invest in a startup or not. Lopez said the firm typically talks to upwards of 1,000 startups per year but only invests in five to 10 of those companies.
"You see so many versions of, 'We're almost at teleportation and if you could just invest now,' so we need to actually make sure you really can do the things that you say that you can do," Bronson said.
There are a pair of companies Lopez said he's "trying to convince" to work in or with New Mexico, whether that's through setting up direct operations here or finding investment deals with firms in the state.
J2 Ventures isn't the only outside venture firm that's expressed a recent interest in deals in New Mexico. Alice Brooks, an investment partner with Menlo Park-based Khosla Ventures, said her firm is scouting for additional investments in the state after leading Los Alamos-based Spiritus Technologies' inaugural funding round, and Albuquerque's Roadrunner Ventures Studios, backed by national deep tech firm America's Frontier Fund, is working with a trio of startups inside and outside the Land of Enchantment to help develop into established companies.
And within the state, firms like Dangerous Ventures and the New Mexico Vintage Fund have pumped money into New Mexico startups across a range of industries, including hydrogen technology, video game development and aerospace.
