Analysis
New Mexico's State Investment Council -- the sovereign wealth fund that invests the state's oil and gas royalties -- has committed $1.8 billion to venture capital funds over the past three years, according to The Information, building out a startup-investing program most state governments never attempt at this scale.
The fund is investing the proceeds of a genuine commodity boom. Permian Basin fracking royalties have ballooned New Mexico's sovereign wealth pool from $18 billion to $72 billion in under a decade, according to Bloomberg.
The state now projects its holdings could reach $100 billion by 2030, large enough to eventually surpass Alaska's Permanent Fund as the country's biggest state-run sovereign pool.
“The fund is investing the proceeds of a genuine commodity boom.”
Where The Money Is Actually Going
- Rather than writing checks to startups directly, the Council is investing as an LP into venture funds with a stated interest in bringing portfolio companies to New Mexico:
- Lowercarbon Capital -- $300M commitment: the check that helped convince Pacific Fusion, a nuclear-fusion startup, to build a roughly $1 billion research and manufacturing campus outside Albuquerque, a project the governor's office says will create hundreds of jobs.
- Lightspeed Venture Partners: part of the same fusion- and defense-tech push, per The Information's reporting.
- DCVC and UP.Partners: additional LP commitments backing the same cluster of hard-science and advanced-manufacturing bets.
The fund's own numbers claim results already: New Mexico credits deals like Pacific Fusion, geothermal driller XGS Energy and hypersonic-vehicle startup Castelion with roughly $2.7 billion in economic impact from projects announced in the past year alone.
This is a genuinely unusual LP profile. Large-scale sovereign capital deploying into venture funds at this size is normally the province of foreign wealth funds -- GIC, Qatar Investment Authority and Mubadala Capital all appear as backers across the AI-infrastructure megarounds Pulse has covered this year, including Nscale's and Crusoe's -- or of large university endowments. A US state treasury acting as an active venture LP, rather than a passive index investor, is closer to what Texas' and Alaska's permanent funds have occasionally dabbled in, but rarely at this scale or with this explicit a tech-diversification mandate.
Set against the broader fundraising market, $1.8 billion is a serious but not singular LP commitment -- comparable to roughly a third of what Bessemer Venture Partners just closed across two new funds this week, spread instead across dozens of managers rather than concentrated in one firm.
What the headline bet misses: committing capital to venture funds is not the same as picking winners, and New Mexico's own reporting frames this as dollars spread across dozens of funds -- meaning the state's direct exposure to any single startup's outcome is thin by design. More fundamentally, the entire program is funded by the same oil and gas royalties the state says it's trying to diversify away from; a sustained drop in Permian Basin prices would squeeze the fund's ability to keep writing venture checks at exactly the moment diversification would matter most.
For founders in the Southwest, the practical upshot is a new, patient, homegrown capital source with an explicit interest in fusion, defense and advanced manufacturing -- sectors that have historically struggled to raise from coastal VCs skeptical of long, capital-intensive R&D timelines. Whether that patience survives the next oil price downturn is the open question New Mexico's own budget office has already flagged.