$500 Million Innovation Evergreen Fund Will Target Growing Startups
Governor Phil Murphy gave an economics speech on October 1, pointing New Jersey in a new direction that will directly impact the tech and life-science sectors here in New Jersey.
The governor promised to build “the nation’s most diverse and inclusive innovation-driven economy with tens of thousands of new jobs in the innovation economy for women and minorities.”
He also said that he would “double venture capital investment into our state – an influx of more than $600 million annually – by aggressively promoting our values-driven economic ecosystem.”
The governor stated that New Jersey will put its “focus on the high-wage and high-growth innovation sectors that have the potential to bring the greatest investment and most jobs into our state – clean energy, life sciences, advanced manufacturing, food and beverage, advanced transportation and logistics, information and high-tech, film and digital media, and finance and insurance,” and promised the state would be “a national model for building an inclusive innovation ecosystem.”
“But, we will also work to bring the best from around the country and the world to New Jersey – and I am anxious to get started on that in just two weeks, when I make my first economic mission to Germany and Israel,” he said.
One of the pillars of Murphy’s support for the tech and life sciences industry is his plan for a $500 million Innovation Evergreen Fund “to supercharge the return of venture capital into our state, pairing the proceeds from competitive auctions of new state tax credits with private venture capital funds to make joint investments in a diverse array of New Jersey-based startups.”
Murphy noted that the New York metropolitan area has realized $33 billion in venture capital investments across more than 4,000 deals over the past five years, “but fewer and fewer of those dollars came into New Jersey.” He said that the Innovation Evergreen Fund will help bring them back.
“Here’s how it’ll work: Corporations will bid on new [New Jersey Economic Development Authority (EDA)] tax credits. The winning bidders will be the ones who offer both the best price and best commitment to help entrepreneurs through mentorship, networking, and other resources.
“The Innovation Evergreen Fund will then invest the auction proceeds, alongside funds from venture capital firms, into promising start-ups with the potential to scale up and create jobs.” The Fund will also make investments in partnership with private sector VCs.
In an email, Brian Sabina, senior vice president of economic transformation at the EDA, said, “The fund is designed to create a splash in the start-up investing world (we haven’t seen any other state with a program like this), and be a ‘shot in the arm’ for our innovation ecosystem.”
In a New York Times article, Chris Sugden, the managing partner of Edison Partners, a Princeton-based venture capital firm, commented that “having the New Jersey program come in to put 50 percent of the bucks to match it, that’s pretty attractive.”
But, Sugden added, “the wheels of government and the speed of venture capital do not always move in sync,” according to the New York Times story. VCs have to move fast to get the best deals. “I understand the desire to make sure the money is invested in New Jersey, but you also don’t want guys in my business to be missing deals,” he said in the article.