Jim Gunton, a prominent venture capitalist in New Jersey, said that Governor Phil Murphy’s proposed $500 million fund to boost venture capital investment in the state is the infusion New Jersey needs to reverse a frustrating brain-drain trend.
“The New Jersey Innovation Evergreen Fund is easy to support because it is a terrific idea. New Jersey has suffered an exodus of talent to New York and Philadelphia,” Gunton said at the Princeton Innovation Center BioLabs event on March 19.
“This fund will reverse the trend of movement away from New Jersey. Talent goes where there are well-funded and promising companies. I have seen companies go where they are able to get funding. Well-funded companies attract the best people. Those companies are the most likely to succeed. Then you grow and exit, and create a self-perpetuating dynamic. … It is vital to the New Jersey economy — and exciting to watch it happen.”
He added, “Venture investors are the feet on the street, making the program succeed,” he added.
The next day, when Murphy and a group of entrepreneurs descended on North Brunswick to rally for the Fund, Gunton was on hand, saying, “As a venture capitalist, I’ve seen firsthand the positive impact that investing in early-stage technology and life-sciences companies has on their growth trajectories.”
He continued, “Given the decline in venture capital funds injected into New Jersey’s startups in recent years, I commend Governor Murphy for this bold and much-needed initiative. I look forward to seeing the benefits it brings to New Jersey’s innovation ecosystem in the years to come.”
The Innovation Evergreen Fund aims to raise $250 million from the auctioning of state tax credits, and another $250 million from venture capital firms, for New Jersey-based startups.
Legislation will be needed to create the tax-incentive-based venture capital contribution system, and the deadline is June 30.
Gunton is founder and a managing partner of Tech Council Ventures (New Brunswick), a recently formed early-stage venture capital investment firm, and the venture-fund arm of the New Jersey Tech Council (NJTC). It is the follow-up fund to the NJTC Venture Fund, founded in 2001.
At the event, Gunton gave a presentation called “The Power of Networked Capital,” which provided a brief overview of Tech Council Ventures. He then answered questions from an audience of about 50 entrepreneurs, investors and others.
Gunton told the group that he has invested in privately held growth technology companies for more than two decades.
“We invest in companies that are up to $15 million in revenue, in all industries in the mid-Atlantic region. The underlying commonality is that they have a technology foundation,” he said.
“What percentage of your portfolio is in New Jersey?” an audience member asked.
“Three-quarters. The reality is a lot of our network is local. And there is a lot going on here,” Gunton replied.
Tech Council Ventures, which manages $130 million across two early-stage venture funds, was created by the New Jersey Tech Council to provide expansion capital for the region’s rapid-growth entrepreneurs and to capitalize on the fertile ecosystem, according to the firm.
The fund invests in early-stage, rapid-growth technology companies, he said, noting that the initial investment can be up to $2.5 million. More money to the tune of $4 million to $5 million follows, in order to bolster a company’s growth.
Nishta Rao, site director of Princeton Innovation Center BioLabs, said that Gunton’s advice is invaluable.
“He was able to come in and answer questions about what investors are looking for. He is looking for companies to grow. And when you are pitching, it’s all about the potential to grow. What people should emphasize is how technology will impact that growth at a fast rate,” Rao said.
“That ties in very well with what we are trying to do at BioLabs,” she added. “We offer a network where entrepreneurs come in and develop their technologies and find out if their technologies are commercially viable.”
“It is all about exposure and accessibility here,” Rao concluded. “That’s what we want to happen at our center. Whenever you learn something new, it is a huge plus.”