In the past, New Jersey startup founders who left the state to attend accelerator programs often ended up relocating elsewhere. Now, founders have an incentive to return to the Garden State.
They can participate in the NJ Accelerate Program, offered by the New Jersey Economic Development Authority (NJEDA), and receive up to $250,000 in direct loans that are matched to funding amounts raised from their out-of-state accelerators. They may also get rent support when they return.
NJ Accelerate is a $2.5 million pilot program launched last year by the NJEDA. In December, the NJEDA announced that it had chosen the first accelerator to work with the program.
That accelerator is Morgan Stanley’s Multicultural Innovation Lab (MCIL), which operates in normal times in midtown Manhattan. Other approved accelerators should be revealed this month.
We wanted to learn more about the program and why Morgan Stanley’s accelerator was the first one approved, so we interviewed Kathleen Coviello, executive vice president for technology, life sciences & entrepreneurship at the NJEDA.
Giving Founders the Tools to Succeed
Coviello explained that many entrepreneurs need the technical support, training and mentoring that accelerators provide. “And we want to be able to reach into the best of the best accelerators. And that means they might not be in New Jersey. We want the entrepreneurs to receive the best education, mentoring, support and thought leadership that they can. But we want New Jersey entrepreneurs to come back home after.”
When the NJEDA talked to entrepreneurs, it found that these founders sometimes didn’t know where to go for help with the business and tech issues they were confronting, Coviello stated. “And I think this is a tremendous opportunity for us to open up a whole host of resources for them.”
She added that she encourages entrepreneurs to do their homework, find the best accelerator for them, and if the accelerator is not already approved by the state, refer the folks who run it to the NJEDA. Conversely, she would like entrepreneurs to contact her or her team and let them know about accelerators they are considering or are about to participate in, so the NJEDA can investigate them and possibly add them to the approved list.
Coviello acknowledged that right now it’s easy for startups to physically stay in New Jersey, as accelerator programs across the country have gone virtual. “But we want to give them the tools to make sure that they can grow and succeed in New Jersey. Also, we really see this as an attraction opportunity because many startups go through these accelerator programs and haven’t picked a location yet.” Startups could pick New Jersey because of the generous incentives for them to stay and grow here.
Stronger Fairer New Jersey
The MCIL “hits our goals of a stronger and fairer New Jersey, with a focus on diverse entrepreneurs,” Coviello said. The lab is run by Carla Harris, vice chairman, global wealth management and senior client advisor; and Alice Vilma, managing director. “They have built out an exceptional program, and have had a really good success rate with their portfolio companies.”
According to a release, Morgan Stanley created its accelerator in 2017 to drive positive economic outcomes for multicultural and women-led companies in the post-seed to Series B funding rounds. It provides content, visibility, technical support and connectivity with important stakeholders who can accelerate the growth of participants’ businesses. The accelerator is built around tailored support and expertise that the entrepreneurs receive from a dedicated Morgan Stanley team.
“Morgan Stanley is committed to bringing attention to the funding gap facing women and multicultural entrepreneurs, and [to] offering strategies for investors to close the gap, as evidenced in our recent research report,” said Harris in a statement. “It’s programs like NJ Accelerate and the MCIL that are critical in helping diverse entrepreneurs have equitable access to capital.”
Coviello pointed out that none of the approved accelerators are obligated to admit New Jersey entrepreneurs. “Their admission policy is their admission policy.” But accelerators that may not be as well-known in New Jersey will have access to a whole new pool of applicants.
Promoting Greater Participation of NJ Entrepreneurs in Accelerator Programs
Coviello told us how the idea for the program came about. It was a team effort, she said. “As we stood up the Golden Seeds chapter in the state [a new chapter of the Golden Seeds angel group and a first for New Jersey], we saw a need for more accelerators for New Jersey entrepreneurs. We had some discussions early with accelerators and how to work with them, and we took the market input from both the entrepreneur side and the accelerator side and blended them to create this. I think listening and being engaged with the market is the best way to design a program that’s really helpful to the community.”
The program promotes greater participation by New Jersey entrepreneurs in qualified accelerator programs, no matter where they are in the country, so the entrepreneurs can gain specialized expertise, mentorship, technical assistance and funding. The program is also seen as a tool to showcase the talent in New Jersey to accelerators on a national stage and to encourage newly forming accelerators to launch in the Garden State.
For qualified accelerators from around the nation, the NJ Accelerate Program will match up to $25,000 per event held in New Jersey, in the form of sponsorship for the approved accelerator(s). Examples of events include accelerator “demo day” road shows, in-person classes, pitch competitions and networking events. Accelerators that have meaningful written policies and practices for attracting and promoting companies owned by female or minority entrepreneurs receive a 5 percent bonus.
For the startup companies graduating from approved accelerators, NJ Accelerate will provide up to $250,000 per startup in direct loans matching the funding from the approved accelerator, plus up to six months of rent support to eligible businesses. The company must have graduated from an approved accelerator program anywhere in the country and then set up their operations in the Garden State within six months. They must also maintain 50 percent of their employees in the state. NJ Accelerate will also include a 5 percent bonus for startups that are certified as women- and/or minority-owned businesses.