How New Mexico’s Oil Windfall Became a $2 Billion VC Bet

A few weeks ago, Augustus Doricko, founder of the cloud-seeding startup Rainmaker, stood in a park on the outskirts of Albuquerque, N.M., flying a drone in the sky. Clad in a khaki field shirt, he looked at home in the desert heat: 97 degrees, not a rain cloud in sight.

“The conditions here are great,” said Doricko, 26. “And the demand for water’s huge.”

Doricko’s company, which is based in El Segundo, Calif., plans to start a trial program around the Rio Grande river in the coming months, dispatching its drones to induce precipitation with the help of a chemical, silver iodide.

That trial is not the only connection Rainmaker has to New Mexico. The startup has received funding from several venture capital firms that have gotten money from New Mexico’s $75 billion sovereign wealth fund. The fund has funneled some $2 billion into VC firms in the last three years as the state’s oil and gas revenues have swelled.

Until 2022, the sovereign wealth fund had maintained strict rules about investing in venture capital: It had required VC funds taking its money to invest a portion of their capital in startups that were headquartered in New Mexico and had at least 50% of their operations there.

Dropping the requirement has allowed New Mexico’s sovereign wealth fund to invest in more VC funds: Startups now receiving money from those funds do not need to have a presence in the state. Some of the venture firms do sign a non-binding agreement to consider New Mexico as a place for their portfolio companies to do business.

More than half of New Mexico’s VC investments have come since the beginning of 2025. That money has gone to some of Silicon Valley’s highest-profile VC shops, including Lightspeed Ventures and 8VC. Another major recipient is UP.Partners, a San Carlos, Calif.–based venture firm.

The sovereign wealth fund’s venture capital program has produced a net internal rate of return of 32.7% over the last three years, according to an upcoming report from financial firm Marsh. That’s a strong showing, though the report does not make clear how much of that comes from realized gains, rather than paper markups on startup valuations.

The push seeks to create a more diversified source of income for the state beyond its famously volatile—and finite—oil reserves. The fund’s capital supports government services like education, healthcare, housing—and the state’s recently launched universal childcare program, the first in the country. It provides funding for nearly 20% of the state’s budget, with that number expected to grow in the coming years, officials said.

“This is about trying to connect New Mexico to the broader economic growth from tech,” said Ryan Sommerville, a general partner at Antler, a VC firm that has received about $105 million from the state. In 2025, Antler launched a specific fund that Sommerville heads, Criticality, to manage investments from New Mexico.

Sommerville, who is based in Boulder, Colo., thinks the fund is an example of how the wealth created in the AI boom can spread beyond Silicon Valley. “How do we get to a place where the average person in the middle of the country can benefit from all the economic growth happening in Silicon Valley? This is one answer.”

Chris Cassidy, a director at the New Mexico State Investment Council, which runs the fund’s venture program, acknowledged that it has benefited from good timing. “Honestly, if we’d started even two or three years earlier, we would’ve caught the tail end of the SAAS era and the Covid bubble,” Cassidy said.

On a recent day in August, I flew to New Mexico on a Gulfstream jet piloted by Adam Grosser, chair of one of the venture firms that received a slice of New Mexico’s money, UP.Partners. Brian Adams, a former venture capitalist at Amazon’s Alexa Fund who leads UP.Partners’ work in the state, came with us. He told me how New Mexico gaveUP.Partners $45 million in 2025, a tranche of money the firm has invested in about 18 companies, including Rainmaker, and used to open a small office in Albuquerque, N.M. “Never did I think I’d find a career in venture capital in New Mexico,” he said.

Other companies UP.Partners has invested in include Zanskar, which uses AI to search for geothermal energy; autonomous trucking company Humble Robotics; Skapion, an anti-drone defense tech company; and Reliable Robotics, which is developing technology for autonomous cargo planes. Adams said the firm vets an average of one new startup a day for its work with New Mexico—typically California based, in early stages and based out of a small facility with dreams of expansion.

Even though New Mexico has dropped the location requirement, the state believes it can appeal to startups with its ample room to build, lower cost of living and legacy of frontier research at the Sandia National Laboratories and Los Alamos National laboratory.

Pacific Fusion, a Bay Area–based energy startup that received funds through multiple venture firms participating in the New Mexico program, is one of the companies that has decided to establish a presence in the state. It recently started construction on a $1 billion campus outside Albuquerque, where it aims to develop technology that could eventually generate electricity at scale. The startup’s other investors include Stripe co-founder Patrick Collison, LinkedIn co-founder Reid Hoffman and former Google CEO Eric Schmidt.

Grosser brought a group of us to the facility’s groundbreaking ceremony, which featured a panel discussion with Schmidt. Schmidt said he believed fusionenergy would help power the AI revolution.

“The story of what we’re doing now is the great American story,” he said.

Chris Sacca, co-founder of Lowercarbon Capital, which has received some $300 million from the state to invest, described bringing about a dozen startup founders to tour the state and meet with state officials recently—and feeling the sense of possibility.

“I keep saying to the younger people who work for us, ‘I don’t think you realize what a unicorn this is,’” Sacca told me. He listed off the reasons why New Mexico might appeal to a startup, including close connections to major labs and research universities, high-end technical talent, abundant land and a willingness to cut through red tape. “I’m not sure I’ve ever been prouder of a tie-up than this one.”