Two Pennsylvania venture firms, Osage Partners (Bala Cynwyd, Pa.) and NextStage Capital (Audubon, Pa.), will invest money in early-stage New Jersey-based companies and open N.J. offices as part of the New Jersey Economic Development Authority's (EDA)’s approval last week of two new venture-fund investments.
Osage's new office will be located in Branchburg, while NextStage expects to lease space in the Rutgers-Camden Business Incubator at the EDA’s Camden Waterfront Technology Center.
The EDA board has voted to invest $3 million in Osage Venture Partners III and $2 million in NextStage Capital II. The limited-partnership investments were funded with $5 million from N.J.'s State Small Business Credit Initiative (SSBCI) federal allocation.
Investments made by the EDA are expected to earn a reasonable rate of return, measured by both financial terms and job growth, according to the EDA CEO Caren Franzini.
Osage Venture Partners III, established in May 2011, will be a $60 million to $90 million fund that aims to make a minimum of 15 investments in early-stage technology companies. The fund has committed to investing at least $9 million in N.J.-based companies, which the EDA says will generate between 75 and 250 new jobs in the state.
Osage's fund targets enterprise technology companies, including providers of general business software, cloud computing, healthcare information and infrastructure-management software.
In an email interview, NJTechWeekly.com asked Robert Adelson, managing partner at Osage, to explain his company’s interest in the N.J. market, since venture firms are not well known for trying to advance economic development.
“Osage Venture Partners III is an early-stage enterprise technology fund focused on opportunities in the greater Middle Atlantic region, meaning our activities are centered in Pa., N.J. and Del. but we are also active to the north in N.Y. and Mass. and to the south in Md. and D.C. We are investing in N.J. for one reason only: N.J. has great early-stage software companies we believe are great investment opportunities.”
“We have already invested in two in-state companies, Identropy (Moonachie) and FieldView Solutions (Edison), and are actively looking at other N.J. companies of equal promise. Job creation is a positive outcome of early-stage investing, but our goal is to return a profit to our investors by choosing to partner with high-potential entrepreneurs leading fast-growing companies.”
We asked Adelson how he will find new deals in N.J. He said the venture firm’s deal flow comes from active participation in venture fairs (like the NJTC Venture Conference recently); a network of venture lawyers, accountants and other venture companies that knows its criteria; referrals from entrepreneurs; and its own portfolio company executives.
NextStage Capital II is a newly created $40 million fund that will seek to make 15 investments in early-stage companies, with a minimum of $6 million going to N.J. early-stage tech firms.
NextStage expects these investments will create 120 new jobs primarily in South Jersey. This fund will focus on business-to-business enterprise information tech companies, including providers of Internet media, communications software, security software and IT infrastructure technology.