In mid-April 2012, Sen. Frank Lautenberg and FCC Chairman Julius Genachowski visited Stevens Institute of Technology (Hoboken) to speak about the “app economy” and how N.J. could become a nexus for app development and tech startup firms.
As he had publicly promised at the event, Lautenberg, together with Rep. Rush Holt, later introduced the America Innovates Act in Congress to help researchers acquire the funding and skills needed to turn their discoveries into marketable products, new high-tech companies and American jobs.
After the public event, N.J. tech leaders participated in a private roundtable discussion spearheaded and actively led by the senator and the FCC chairman and aimed at determining how to catalyze the N.J. app economy.
Participants represented various stakeholders in the mobile app economy, including large established N.J. companies, mobile app entrepreneurs, venture capital firms, academia and local government.
Those seated at the table included Mayor Dawn Zimmer of Hoboken; leaders from Rutgers (New Brunswick), NJIT (Newark) and Stevens; Michael Mandel of the Progressive Policy Institute (Washington, D.C.); and delegates from established tech companies such as Alcatel-Lucent Bell Labs (Murray Hill). Representatives from some N.J. startups were also invited.
After the private event, NJTechWeekly.com spoke to two of its participants: crafterMania (Hoboken) startup entrepreneur Aaron Price, who is also entrepreneur at large at DFJ Gotham Ventures (New York), a VC firm, and Yan Auerbach, a cofounder of SpeechTrans, a Lyndhurst startup offering innovative language translation applications. NJTechWeekly.com also contacted Lautenberg for his take on the roundtable.
The senator called the roundtable discussion “very productive” and added that he looks forward to “seeing what the students and faculty at the universities participating in the New Jersey Apps Challenge produce. New Jersey has a rich heritage of technological innovation, and by bringing business and education leaders together we can help spur the next generation of New Jersey innovators.”
Price said Lautenberg had actively engaged the meeting’s participants, seeking information and comments from all. Although the various stakeholders came to the table with differing viewpoints, they were honest about the opportunities they saw to foster a N.J. startup ecosystem’s growth, he added.
Price, who founded NJ Tech Meetup, the state’s largest tech meetup community, said one of the big challenges discussed was the disconnect among the tech community, universities and N.J. companies, and the fact that the companies and universities each don’t know what is going on in the other organization. The larger companies were eager to see better bridges built between all the universities and the tech community.
Mayor Zimmer made the case for Hoboken as a hub for a startup ecosystem, asking for support to help the city create a culture that would bring startup companies to town, Price said. She noted ways this could be done: making the city investment-friendly and creating more inexpensive office space. She pointed out that Hoboken has tremendous resources for startups and a strategic geographic location, and is family-friendly to young entrepreneurs with children.
Price highlighted that N.J. has a wealth of experienced but underutilized executives who could mentor startup companies. “One of the things many agreed on was that we are not leveraging our Rolodex, [not] bringing together the people who built the great N.J. tech companies,” he noted.
Auerbach of SpeechTrans said the roundtable discussion was very beneficial for him because he had access to and could communicate with top minds in both industry and government, whereas “usually the only interaction we have with them is on tax day.”
SpeechTrans launched in March 2010 and by September had its first product in the iTunes Store. The startup now offers several language translation apps and is expanding in the B2B arena because it sees “a huge necessity for our translator in hospitals, government agencies and international businesses,” said Auerbach.
The company’s most recent innovation, InterprePhone, is designed to sit inside a Telco network. It is basically a phone number users can call to have their conversation interpreted in nearly real time. The company is engaged in beta testing with a multinational enterprise that just acquired a Japanese company.
Speaking about the roundtable, Auerbach said, “I think it was a great chance to voice our concerns about the opportunities we see ahead for the N.J. startup community as well as the app community specifically.” He said he had gained insights into the new programs being launched and the new incubator spaces emerging in the Hoboken area, Newark and other North Jersey communities.
“One of the key benefits of being a North Jersey startup is excellent access to talent from the city within a short commute. We also benefit from access to people from Rutgers, Stevens and NJIT … We plan to use Rutgers students as our company’s interns.”
Auerbach spoke to Sen. Lautenberg about the Jumpstart Our Business Startups (JOBS) Act and how it was an excellent step forward that will help him close his next funding round. However, he believes Congress should not have excluded institutional investors, who can facilitate bridge investments for early-stage companies caught in the funding gap.
“Currently numerous angels invest in companies early on as seed rounds, and investors invest in a later-stage rounds, but there are very few sources in between that will take the risk and do a $2 million Series A round to increase opportunities for newer ventures,” Auerbach said. This is when companies need the money most, when they are just hitting the market and need expansion capital.
“Clearly Congress needs to expand the JOBS Act,” he added. “If the government can step in and help provide incentive to superangels or institutional investors to make these Series A investments via tax breaks or other programs, it will reap tremendous benefits. These companies will create more jobs and be the future of our country’s economy.”
SpeechTrans is located at the New Jersey Meadowlands Commission’s Business Accelerator, which is closing and moving to a new space. Some tech companies there may not follow the accelerator to its new facilities.
“We did express our concerns and frustrations about our particular incubator to Sen. Lautenberg,” noted Auerbach. “Our situation seems to be an anomaly … In general, Lautenberg and others believe they will be increasing the number of incubators in the area.” SpeechTrans has not yet decided if it will move with the incubator or find another home.