Developing the New Mexico Innovation Ecosystem

Session Overview

Leaders explored the key drivers of New Mexico’s innovation ecosystem. They highlighted major challenges and opportunities in the region, as well as suggest best practices to scale nationally to dramatically increase the innovation capacity of the United States.

Key Session Insights

At the heart of New Mexico’s value proposition is its sense of place. Innovation in the state is shaped by more than technology or capital — it is powered by people, culture, and an entrepreneurial grit.

As Mr. Yeri Lopez, Director of Partnerships at J2 Ventures noted, what draws people to New Mexico are the intangibles: its size, culture, and personalities. This spirit of resilience, deeply embedded in the region’s identity, makes it a place where innovators not only arrive but often choose to stay. The state’s “frontier willingness to build” distinguishes it from more established tech hubs.

A key asset that further distinguishes New Mexico is its abundant land. As Robey Clark, Director of Strategic Initiatives at Kairos Power, pointed out, “for start-ups like Kairos to grow, we need land. Land is in abundance in New Mexico.” The state's vast, open spaces provide opportunities for large-scale facilities, experimental sites, and industrial zones that are often scarce or prohibitively expensive in more crowded regions. This geographic advantage supports both early-stage and established companies looking for room to innovate, scale, and secure long-term operational flexibility. Land, coupled with New Mexico’s rich history and established industrial base, offers a strategic foundation for the growth of startups, making it a compelling place for businesses to establish themselves and thrive.

Despite these strengths, New Mexico faces structural challenges, which make its innovation ecosystem especially sensitive to external forces. With a relatively small population, the state lacks the dense local markets and capital networks that help fuel larger innovation hubs and buffer them from shifts in national policy, economic cycles, or investor sentiment. New Mexico is often “blown around” by larger national trends, depending heavily on federal funding streams, is highly susceptible to talent outmigration during downturns, and faces increasing pressure from coastal hubs with greater access to venture capital. The state’s lack of critical mass also leads to greater policy fragmentation, making it difficult to coordinate action, sustain state-wide momentum, or commercialize homegrown breakthroughs at scale.

However, one of the state's key strengths lies in its U.S. DOE National Laboratories — Los Alamos (LANL) and Sandia — which have the potential to anchor a more cohesive innovation ecosystem. These labs provide more than just advanced research — they serve as catalysts for economic development, workforce training, and technology commercialization. Ms. Nora Sackett, Director of the Office of Strategy, Science, and Technology at the New Mexico Economic Development Department, highlighted programs like LEAP and the Technology Readiness Gross Receipts (TRGR) tax credit, both funded by LANL and Sandia. LEAP connects early-stage companies with U.S. Department of Energy national laboratory resources, offering access to laboratory space, technical infrastructure, and specialized expertise. TRGR helps bridge the gap between research and commercialization by subsidizing access to lab facilities and business development support. This is especially valuable for deep tech startups, which require complex environments to test and scale their technologies. These programs reduce barriers to entry and bolster investor confidence by offsetting personnel costs and enhancing startup credibility. Dr. Luis Chavez, CEO of Hydrosonics, is a success story of these initiatives, and he pointed out how the funding and training Los Alamos provided to him as an entrepreneurial postdoc fellow was essential for Hydrosonics’ development.

While scientific and technological talent is abundant, the state’s entrepreneurial ecosystem still faces persistent gaps. Chief among them is the lack of experienced business leadership capable of scaling innovative ideas into viable enterprises. Many startups fail not because of poor science, but due to weak product-market fit and inadequate commercialization strategies. Mr. Mukherjee argued bridging the gap between research and market-ready products requires more than funding — it demands stronger CEO talent, a business-savvy investor base, and greater entrepreneurial acumen within academic settings. While New Mexico has a strong capital base and scientific infrastructure, it lacks the external networks and visibility needed to attract seasoned business leaders and veteran investors.

Mr. Mukherjee also called for a shift from invention to market execution, noting that many innovative startups struggle with securing early-stage funding and operational support. New Mexico must focus its funding on developing entrepreneurship throughout the state, which is the missing piece for its commercialization pipeline. Mr. Lopez also pointed to dual-use applications of many new technologies being developed in the state — especially in defense and security — as a strategic way to reduce risk and enhance investor confidence. By aligning state incentives with these sectors and connecting startups to seasoned business operators, New Mexico can better position its innovation ecosystem for scalable growth.

A robust innovation economy also depends on talent — both in quantity and alignment. Mr. Robey Clark, Director of Strategic Initiatives for Kairos Power, noted while New Mexico boasts strong academic institutions and access to U.S. DOE national laboratory expertise, workforce availability remains a critical constraint. Companies like Kairos are addressing this challenge through iterative, in-house training and vertical integration, developing their own capabilities to meet their manufacturing needs. Meanwhile, partnerships between the labs and universities, supported by state legislative initiatives, are working to align educational pathways with industry demands. Ms. Sackett noted ongoing efforts by the legislature to collaborate with private leaders to identify and resolve workforce skill-gaps, too.

Yet workforce readiness alone is not enough — talent must be supported by the infrastructure needed to enable innovation at scale. New Mexico is making targeted infrastructure investments in its energy and water systems to ensure that industrial sites are ready for business. Ms. Sackett pointed to state investments in “ready-to-go” industrial zones and the establishment of a Strategic Water Fund aimed at addressing the energy-water nexus. This fund supports water reuse, underground storage, and pilot projects in advanced treatment, all of which are critical for sustaining industrial growth in an arid region.

New Mexico’s innovation future hinges on its ability to harness its distinctive assets — its people, its laboratories, its frontier ethos — and align them with intentional strategy, infrastructure, and market connectivity. By deepening partnerships, strengthening entrepreneurial capacity, and investing in place-based infrastructure, New Mexico can solidify its role as a national leader in innovation-driven economic development.