Access to Capital Number One Concern for NJ Startups, LaunchNJ Survey Reports
On Monday, LaunchNJ released the results of its survey, the “State of Starting up in the Garden State.”
Launch NJ is a nonprofit organization founded by Carlos Abad and Matt Krayton dedicated to accelerating the development of the entrepreneurial ecosystem in New Jersey by connecting entrepreneurs and startups with essential resources.
At the end of 2014 and the beginning of 2015, the organization asked 108 members of the New Jersey entrepreneurial community about their attitudes towards starting up in New Jersey.
Some 58 percent answered that they were optimistic or very optimistic about the future of New Jersey’s entrepreneurial and startup ecosystem.
When asked to specify the single biggest challenge facing startups and entrepreneurs in New Jersey, by far the largest proportion of respondents said “access to capital,” with 44 percent of them giving this answer.
Access to talent was also seen as a looming problem, with 19 percent of respondents calling it their biggest challenge. And 14 percent said New Jersey’s infamous cost of living was their biggest challenge.
Almost a third of the respondents disagreed or strongly disagreed with this statement: “Entrepreneurs have adequate access to technical talent in New Jersey, such as web developers, software engineers and data scientists.” Some 58 percent of respondents disagreed or strongly disagreed with this statement: “Entrepreneurs and startups in New Jersey have adequate access to capital.”
A large plurality of the respondents (45 percent) were either neutral or unsure about the strength of New Jersey’s entrepreneurial community, while 18 percent characterized it as strong or very strong.”
Conversely, 30 percent felt that the entrepreneurial community here was weak or very weak, and 5 percent said it was somewhat weak.
The survey challenged the long-held belief of many people who have studied startup ecosystems that government should not be involved in helping to create them.
Respondents identified local and state government as an important factor in addressing their challenges. Some 70 percent felt that government was important or very important, 13 percent felt that local and state government was somewhat important or not that important, while only 5 percent felt that it was irrelevant in building a strong entrepreneurial ecosystem in New Jersey.
“We as a state need to start to reorient our thinking about what fuels growth in a dramatically transformed post-recession economy,” said Abad in a prepared statement. “Progress is being made grassroots level and along the way we’ve discovered countless entrepreneurs who have innovative ideas, but we need to create an environment where 21st century innovation and growth can occur.
“It’s encouraging to see policy makers and other decision makers in New Jersey starting to talk more about the importance of innovation and entrepreneurship. We’re moving in the right direction,” he added.
Despite all the problems, an overwhelming majority of the survey participants, 72 percent, agreed that the New Jersey ecosystem was heading in the right direction.
They said that the growth in access to resources and events — such as meetups, academic institutions and mentors — was having a positive impact on the ecosystem.
Over half of the respondents (55 percent) found New Jersey to be a welcoming place for launching or growing a venture, which is somewhat of a surprise, given the challenges they identified.
Speaking to the somewhat contradictory results of this survey, in which respondents said that they didn’t have access to talent and capital but were optimistic about where the tech ecosystem was heading, Krayton said, “I think, generally, the optimism expressed in the survey is a function of seeing momentum in terms of putting some of the building blocks of a strong ecosystem in place. A few years ago, startup events were relatively sparse in New Jersey, but now there is an event to attend every night. The grassroots energy and enthusiasm is really driving the conversation about entrepreneurship forward in New Jersey in a positive way.
“While I think members of the entrepreneurial community are beginning to see movement in the right direction, they are still facing challenges. The ecosystem in New Jersey is still relatively young, so entrepreneurs aren’t seeing a ton of deal flow, and may not have the capital to attract technical talent yet.”
Discussing the survey, Abad said, “Entrepreneurs in New Jersey seem to be saying that more resources are needed.Everyone tends to think you have to go to Philadelphia or New York, without knowing what’s in their backyard. There are a lot of meetups and tech groups throughout New Jersey, people just might not know about them.
“Groups like New Jersey Tech, Morris Tech, Princeton Tech and many others have done great work, and it’s clear in the survey that the entrepreneurial community is seeing that progress, but we still have a lot of work to do.”
The survey was conducted by Krayton’s firm, PubliticsPR+Digital. The complete results, including a press release and raw data, can be found here.