Well, New Mexico is turning out to be the land of enchantment—at least for a few lucky deep tech firms.
This morning, a new NM–based company, Tierra Adentro Growth (TAG) Capital (say that five times fast, nerds), announced in an exclusive interview with Tectonic that it has raised a $100M deep tech infrastructure fund focused on “catalyzing the next generation of technology companies” building in the state.
Boston-based VC J2 Ventures (backers of Aalyria, Code Metal, Oura, Apex Space, and others) advised on the fund’s creation and will continue to advise on investments (while remaining a separate legal entity from TAG).
J2 co-founder Alexander Harstrick told Tectonic the full $100M came from New Mexico’s $70B sovereign wealth fund, the New Mexico State Investment Council (SIC). The whole shebang will be led by TAG MP Alok Sindher, of D.E. Shaw and J.P. Morgan fame.
Looks like it might be time to go west, boys and girls.
Build up: Now, you might be sitting there thinking—wait, why in the heck is Tectonic talking about an infrastructure fund? Don’t you guys like, do, defense tech stuff?
Well, newsflash: A lot of what will actually make that shiny defense tech (and other deep tech stuff, like energy and quantum) scale is infrastructure—factories of the future, new-age shipyards, and big ol’ data centers. And companies from Anduril to Saronic to Hadrian are raising literal billions of dollars to build this stuff.
“While I’m really excited about this influx of money that comes into deep technology, it has become kind of a parody of itself,” Harstrick said. “People are raising massively dilutive rounds to the founders, so that they can build warehouses and factories and all of these different things. That really makes no sense, right?”
That money, Harstrick, Sindher, and J2 co-founder Jonathan Bronson thought, should be coming from infrastructure-specific funds instead.
“The only reason you [raise these massive rounds to build production capacity] is because banks or infrastructure funds didn’t have a vehicle by which they could loan or underwrite to these startups to build those things,” he added. “That felt like a massive gap in the market, and that’s the gap that we’re filling.”
Holding hands: Here’s how the whole thing will work.
- TAG will pick the investments with J2’s advice.
- When we say infrastructure, we mean literal buildings—factories, production facilities, and the like.
- The fund’s first investment (already deployed) was into AI-first geothermal energy company Zanskar, which is building a plant in the state.
- The next two investments on deck are in a solar facility and a data center. They’ve also got an aerospace and defense facility and an advanced manufacturing facility in the pipeline.
- J2 will advise on the investments—basically, they’ll bring things to TAG they think could be a good fit, and work with them to deploy the cash money.
The plan is that checks will range “from a few million dollars to $40 million, depending on the needs of the company,” and will focus on “everything from quantum to aerospace and defense to telecommunications to energy,” Harstrick said.
Out west: Now, New Mexico might not be the first state that comes to mind when you think of defense tech and deep tech VC, but they’ve actually made some serious money moves in the space (remember Road Runner and the state’s quantum push?)
“The state realized with a massive windfall from a large oil reserve that they found, [that] they were literally taking money from the ground, which is awesome, but like all physical reserves…that may eventually run out,” Harstrick said. “They had an opportunity…to be able to invest in the future of technology in a way that only New Mexico can take advantage of.”
And they’ve put that crude oil money where their mouth is.
- The SIC has put checks into deep tech and dual-use funds, including America’s Frontier Fund (AFF) and J2.
- In total, the SIC’s Strategic Venture Capital Program has committed $1.8 billion to venture funds over the past three years.
- Defense companies, including Castelion, X-Bow, AIRO, and space companies like Mantis Space and Sceye, have all built facilities in the state.
- They’ve also got all that defense legacy, what with Sandia and Los Alamos. That means talent already on the ground.
Basically, Harstrick said, the stars aligned—Sindher (who is one of J2’s LPs) wanted to build an infrastructure fund, and New Mexico wants people to build that infrastructure in their state.
“Alok Sindher is the guy when it comes to infrastructure investing,” Harstrick said. “And the state of New Mexico was like, ‘We could not be more excited.’ So when you have a combination of capital talent and thesis, you have to start a fund. So that’s what we did.”