By Jim Scarantino on June 2, 2010
But Recipients Support Program
The negative long-term performance of New Mexico’s investments in local start-ups remains little changed. Two additional companies have failed and the relatively few jobs created come at a very high price.
Sun Mountain Capital, the advisor to the State Investment Council on its New Mexico private equity program, on May 17, 2010, released its only report in nearly a year. Its last report, dated June 30, 2009, showed a 12% negative return and only 1,107 jobs credited to a total commitment of $382,200,000. Our own analysis of the NM private equity program, released shorty before the Sun Mountain report last year, showed similar job numbers. We calculated those jobs had come at the price of $378,000 each.
A Failure by Any Measure: The State Investment Council’s New Mexico Private Equity Program
Our calculation of jobs credited to the program came it at about 1/3 of what Sun Mountain had been claiming up until then.
Sun Mountain’s latest report shows a negative 12.3% return. It again attempts to justify the program in terms of economic impact instead of investment performance as measured in traditional returns to the taxpayers. It reports that 56 New Mexico companies have received funding, up one from its 2009 tally. Thirty-nine of those companies are counted as “active,” 11 have been “liquidated,” which usually means failed, and 5 have “exited,” meaning they have been left the venture cap stage through acquisition by another company.
As our previous reporting shows, “active” companies includes firms with no or only one or two employees, as well as firms which left New Mexico shortly after receiving millions of dollars in state investments.,
