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By Stephanie Cartier

As a scientist, Joe Cesarano is always coming up with new ideas. But 12 years ago, he hit on one idea that would change his life. An 18-year veteran of Sandia National Labs, Cesarano knew his idea had potential. He had come up with an auto-mated way to manufacture ceramic parts, which was easier and faster than traditional methods. Using a syringe, parts can be built layer by layer, a process he calls robocasting. Because the new method allows a dense ceramic part to be free-formed, dried and baked in less than 24 hours, engineers can conduct rapid prototyping to see if a design works.

The problem was that no one could see a clear use for this new technique. But Cesarano kept pushing; there had to be some use for this new technology.

Finally in 2000, four years after his initial work, Cesarano came across a potential commercial application: ceramic filters. “The robot can make a structure that can’t be made by machining or molding easily, and the structure is such that it gives improved performance, so we had a niche,” Cesarano said. “And it turns out that that niche had no importance to Sandia.”

So Cesarano decided to set out on his own. One of the benefits of working at Sandia National Labs is that scientists can take advantage of a two-year leave program to pursue an entrepreneurial venture. If their efforts are not successful, they can go back to the labs in the same or similar position. That opportunity gave Cesarano the confidence he needed to make the jump. In 2007, he launched Robocasting Enterprises, LLC and quickly landed his first customer. To start manufacturing immediately, the business entered into a supply agreement, working only with that customer. Cesarano’s team was initially shipping 200 units per week, with the goal of reaching 1200-1400 units weekly. Now, roughly a year from launch, the team produces an average of 8,000 units per week and has just surpassed the quarter million mark. Now, their challenge is what every entrepreneur hopes for - keeping up with demand.

The eventual goal is for Robocasting Enterprises to branch into new applications, such as artificial bone scaffolds and dental augmentation. While the work is challenging and the hours are long, Cesarano says it’s one of the best moves he ever made. “When you get into your own business, the highs are definitely a lot higher, and the lows are definitely a lot lower. So every week you have to face a new challenge that you weren’t expecting,” Cesarano said. “It’s a less-even keel of a lifestyle, but in a lot of ways, it’s more rewarding as well. When you’re out doing this, you feel that you’re really living.”

Cesarano’s story is not entirely unique among New Mexicans. High-tech businesses are starting up all over the state, and industry experts say the future has never been so bright for those who want to make the leap into an entrepreneurial venture.

MORE THAN GOOD IDEAS
One important source of help with those efforts is Technology Ventures Corporation, an organization founded in Albuquer-que by the Lockheed Martin Corporation in 1993 as part of a proposal to manage the Department of Energy’s Sandia National Laboratories. Their mission is to move technologies developed in the labs and universities to market by pairing investors with the entrepreneurs.

During an annual spring symposium, entrepreneurs present their business plans to TVC, and TVC in turn presents those opportunities to the funders. But it takes more than just a good idea to get off the ground. “The pledge that we give to investors is that we will not bring them good ideas, we will bring them quality investment opportunities. And the amount of work between a good idea and a quality investment opportunity is thousands of man hours,” said Sherman McCorkle, CEO of TVC. McCorkle believes research needs to take place at every level. “We want to make sure this good idea is fully embellished in all of its dimensions to make it a successful investment opportunity.”

Their successful pairings have helped launch nearly 100 new businesses, and TVC is credited with creating almost 10,000 jobs in the state. Although those numbers are impressive, the environment hasn’t always been so friendly for small businesses. It takes money to get those businesses started—something New Mexico was missing until recently.

“The environment in 2008 is 180 degrees different than the environment was 15 years ago,” McCorkle said. “It’s better than it has ever been.” Government support such as tax incentives and development opportunities for investors have been critical. Furthermore, the infrastructure to support technology start-ups has progressed immensely, and attorneys and accountants familiar with start-ups are moving in. “So any point on the compass that you look to, New Mexico in the year 2008 is in an enviable position,” McCorkle said.

And investors have taken notice.

GROWTH ON A GLOBAL SCALE
Flywheel Ventures is one of the venture capitalist offices key to building the state’s high-tech, start-up industry. Managing partner and founder Trevor R. Loy has spent the last 15 years working with venture investing and entrepreneurial operations in seed and early-stage technology ventures. “New Mexico is one of the best places in the world right now to think about starting a technology-based business,” Loy said.

According to Loy, a number of factors point toward a region’s ability to sustain start-up businesses: a firm foundation of creativity and innovation, an environment that attracts entrepreneurial, creative leaders and, of course, funding. Historically, finding capital has been difficult in New Mexico. When TVC first opened, there were no venture capitalist offices based in the state. In the past 15 years, the innovative work being done in the Land of Enchantment has attracted 22 venture capitalists. Government policy has changed to support small businesses in the last decade. “What we’re seeing a lot of are global companies headquartered and being started here in New Mexico, which are selling to global-based customers almost immediately,” said Loy. “It’s a great way for the state to really spread its economic growth.”

To give some perspective on growth, McCorkle estimates that about $2 billion has been invested between TVC and the rapidly expanding Eclipse Aviation. Even more noteworthy is that between 90 and 95 cents of every dollar invested is coming from outside the state.

SPARKING INTEREST ELSEWHERE
Daniel W. Parker, CEO of Enerpulse, Inc., knows the importance of finding funding elsewhere. Since 2004, he and his team have been developing a more powerful, efficient spark plug they hope will revolutionize the industry. The company developed Pulstar. Using a capacitor, which accumulates energy over a long period of time, the new spark plug can emit an instantaneous burst of power, boosting output exponentially. In recent tests, Pulstar has increased fuel efficiency by at least 6 percent in all vehicles.

Enerpulse launched Pulstar into the auto aftermarket last June, and the product has taken off, crossing the $1 million mark in March. Most sales are online, but the product is in major auto retail stores in the West. The plan is to expand into retail nationally and eventually reach the automakers.

The auto industry isn’t strong here; none of their funding has originated in state. But Enerpulse participated in TVC’s program in 2003 and secured their first investor, Altira Group, LLC out of Denver, which helped get them off the ground. In April, the European-based Robeco Clean Technology Private Equity II, along with SAIL Venture Partners, LP, invested another $5 million, bringing the second-round total to $10.5 million.

“The environment is good from the standpoint that you have good help and exciting new technology, and people will come out of the woodwork to be a part of it, and we’ve been very fortunate in that regard,” said Parker.

RISKY BUSINESS
Despite the success, venture capitalism is risky, and many new businesses struggle or fail. To mitigate the risk, Flywheel Ventures looks for a constellation of characteristics before investing: large and growing markets, the ability to change according to new solutions, innovative technology and a strong financial investment opportunity with potential to generate initial profits. The biggest factor is the entrepreneurs themselves. Flywheel looks for dedicated, talented and creative founders who have the ability to take off.

Although the checklist can help narrow the field of investment opportunities, the risk is very real. “That’s probably the hallmark of the venture capital model. We’re looking to invest in lots of companies in which we expect a large number to fail, but with the ones who succeed, we expect to make 10 times our money, and that more than compensates for all of the failures. That’s what allows us to take such high risks,” said Loy.

FAILURE ISN’T ALWAYS BAD
But failure is part of the package – it’s inevitable that some start-ups won’t make it. It’s the founders who make failure a learning point on the route to success that McCorkle says will be successful. Many who weren’t successful initially go on to launch multiple, successful enterprises. “Investors very much want to see that type of an entrepreneurial environ-ment,” he said.

Randy Krall is the CEO of Wellkeeper, Inc., an organization that’s developed affordable remote monitoring systems for small operators of oil and gas wells. He has successfully founded and led three other start-ups and knows the process well. “You’ve got to have people who can supply the capital, you have to have smart people to actually do the work at the company. And at some point, you need some management expertise, and all of those things have to grow up together, but it’s kind of hard to get it all going until you get the capital in, and that’s the very encouraging change that’s just happened in New Mexico in the last few years,” Krall said.

In 2007, the total amount of venture capital invested in the state was $128 million; Flywheel managed $40 million of that. And despite such fantastic success, there are challenges to being in New Mexico. With only two million people in the state, there is a smaller talent pool, coupled with the fact that New Mexico historically has not been home to large, publicly traded companies. “We actually have a dearth of corporate infrastructure. The combination of not very many people to begin with and not many people in particular who’ve had experiences building businesses means that we might have to import the management talent for our companies more often,” said Loy.

LOOKING FOR LEADERSHIP
In many start-ups, the founders know the technology inside and out but may not have the necessary business experience. “Often those founders are outstanding, but they’re starting a company for the first time. In some cases, they have been working in a research organization or another non-company setting for their whole careers. So they might not only be starting a company for the first time, it might be their first experience with a private company altogether,” said Loy. So to cover those weak spots, Flywheel works with the founders to recruit the right management talent.

MANAGERIAL MINDS
John Uczekaj is one such manager. He was living in Tulsa, Oklahoma when he was recruited to be the president and CEO of Aspen Avionics, an Albuquerque start-up, founded in 2004 by two former Eclipse Aviation employees. The two founders, Jeff Bethel and Peter Lyons, had come up with a way to make advanced technology from large-scale commercial and business aviation markets accessible for smaller operations. Their goal is to make affordable cockpit displays to reduce pilot workload and make flying safer and easier. Like many other founders, Bethel and Lyons knew their technology inside and out, but the team recognized that they would need additional management expertise. “That’s when they recruited me as the CEO. In February 2007, they hired me to come on board, take their idea, build a team and take it to market, which we’ve done in the last year,” said Uczekaj. Because Aspen Avionics needed Federal Aviation Administration (FAA) certification, the company was unable to deliver any product until March of this year.

Although the business is incredibly new, Uczekaj said the challenge now facing the company’s just under 50 employees is to meet demand. “We basically have enough backlog for this entire year in 2008 and into 2009,” he said.

According to Uczekaj, Albuquerque is an ideal location because the growing aerospace industry has political and industry backing. But New Mexico has historically lacked strong educational programs in aerospace; as a result, Uczekaj recruits from outside the state. “Fundamentally, support for the education system to improve is one of the primary definers of technology, not just aerospace, but technology success in Albuquerque. The continued growth in that area is going to benefit all of us, and we look forward to seeing that happen in Albuquerque,” said Uczekaj.

HELP, HELP AND MORE HELP
Also helping with management, marketing and other business essentials is the New Mexico Small Business Assistance Program (NMSBAP), established in 2000 to commercialize technology developed within Sandia National Laboratories (SNL) and Los Alamos National Laboratory (LANL). Since then, they have partnered with the University of New Mexico’s Anderson School of Business to harvest business and marketing expertise.

“For a long time in New Mexico, the solution to technology commercialization has been more technical people, more techno-logy, not more management,” said Steve Walsh, professor in the Anderson School of Management (ASM) at UNM. “Most of the people driving technology commercialization are technologists, and that’s really not what they know how to do. This program is one of the first to really recognize that marketing gap.”

While bridging that gap is critical, progress is slow. “New Mexico is getting to a point where we really are linking technology development with economic development. It’s not enough for our research and development institutions like Sandia and Los Alamos and our research universities to support the creation of technology,” said Sandia’s Jackie Kerby Moore. “Where the rubber hits the road is where we link the technology development to economic development, where we’re leveraging our resources to support the creation of businesses and the expansion of businesses.”

“That’s why this program is so exciting,” said Mariann Johnston, institutional program manager at LANL. “You’re taking that entrepreneurial spirit and drive, and matching it with technology know-how, and they’re not the same thing.” And the two traits feed each other; once researchers spend time working with an excited small business, they often go back to the labs more passionate about their own work.

“This helps everybody, this helps move our technology forward, it helps create new businesses that bring wealth and high-paying jobs,” said Sul Kassicieh, ASM endowed chair in economic development at UNM.

Experts agree the future is full of possibilities. “We’re just excited about technology in New Mexico,” said Andrew Salazar, director of business assistance at TVC. “It’s come a long way, but there’s a lot of potential. It creates jobs, and almost a billion dollars in capital has been invested. A vast majority of that is from outside New Mexico. So the fact is that our clients are receiving financing from outside the state, creating wealth, creating jobs, shipping products beyond New Mexico’s borders and in many cases, beyond the United States’ borders. It’s exciting to be a part of that.”