By now most members of the New Jersey tech ecosystem have heard the phenomenal news that New Jersey ranked in the top 10 in the nation for venture capital invested in 2021.
Innovation-focused companies in New Jersey secured $5.5 billion in 219 venture capital deals last year, up from $1.7 billion in 154 deals in 2020, according to the New Jersey Economic Development Authority (NJEDA) and data on PitchBook. By contrast, in 2017 the state saw a total of only $818 million received in 143 venture capital deals.
While early-stage pre-seed and angel investments weren’t calculated separately, the state noted that last year the NJEDA approved a record-breaking 559 Angel Investor Tax Credit Program applications, a nearly 400 percent increase over 2020. These approved applications represented the injection of more than $100 million into 39 New Jersey businesses, the NJEDA said.
In brief, this means that New Jersey startups, whether early-stage or growth-stage, are finally on the radar of the global venture-capital community. It means that we are growing lots of quality, fundable companies that are thriving, scaling and making money for their investors. It means that we are employing a lot of people in the startup economy. It means that New Jersey’s efforts to create startup hubs throughout the state may be working.
Now, when the world thinks of where a lot of companies are getting funded, especially in healthcare, pharma and the life sciences, it will think of New Jersey once again. And it will also think of New Jersey’s ability to commercialize its technology in the areas of data, cybersecurity, agriculture, fintech, energy, materials science and other areas. Hopefully, the world will recognize that New Jersey’s government, universities, large companies, startups, venture capitalists, angel funders and industry organizations are now working together to create an even larger innovation economy here.
NJTechWeekly.com asked New Jersey VCs and angel investors to react to this news. Some were surprised, others not. Some saw continued momentum, while others worried about hitches in the future. Here’s what they had to say.
Jim Gunton, founder and managing partner, Tech Council Ventures:
Tech Council Ventures is delighted, but not surprised, to see New Jersey again ranked among the nation’s top 10 venture recipients.
It just makes sense, given New Jersey’s level of innovation and research, senior commitment by the Murphy administration and NJEDA, historic venture dollars invested and today’s support by the venture, corporate and angel ecosystem.”
Tech Council Ventures (Summit) invests in seed and Series A financing across all industries throughout the mid-Atlantic region.
Chris Sugden, Edison Partners managing partner and chairman of the firm’s investment committee:
We are not surprised by the attraction of New Jersey for technology investment, and we are happy to see the momentum. The state has been a longstanding hub of entrepreneurial innovation; technology talent is deep, the state also has unique advantages in high-growth industries such as fintech, supply chain and pharma. Edison Partners’ success in New Jersey is a testament to the opportunity in our state. Two of our top five all-time best returns are from companies founded, scaled and headquartered in New Jersey. The government’s focus on the entrepreneurial ecosystem and innovation is helpful and necessary. A big challenge is going to be keeping talent in New Jersey, as the cost of living in New Jersey is an ongoing challenge. We are seeing that talent is much more portable and, as many have observed, the impact of the pandemic makes remote work much more prevalent.”
Edison Partners (Princeton) invests in and brings strong domain expertise to three areas: fintech, healthcare IT, and enterprise solutions. The firm invests $10-$30 million in high-growth, recurring-revenue technology companies in these industries. Its current portfolio is located outside Silicon Valley, across 18 states.
Thomas Wisniewski, managing partner, Newark Venture Partners:
“The NJEDA has been a long-time partner of Newark Venture Partners, and their work alongside the governor to encourage the innovation economy is paying off. In Newark, we are excited to see the addition of new accelerators and incubators, which are helping to both enhance the talent network and engage new founders from within the state. As early-stage investors, we see a huge opportunity in this growing ecosystem, particularly in verticals like healthtech, fintech and supply chain, where our geography and corporate community can really benefit growing companies.”
Newark Venture Partners (NVP) identifies, invests in and supports best-in-class B2B software founders from all over the country as they build innovative solutions for some of today’s most complex business challenges. NVP leads or participates in seed rounds with investments of up to $2 million.
NVP works with its corporate partners to source, vet and add value to investments. This approach leads to stronger relationships with its portfolio [companies], which have additional incentives to champion technologies grown under their mentorship at NVP.
Stephen Dyer, chairman of Jumpstart New Jersey Angel Network:
“I was both surprised and happy to see that news. While it will always be a challenge for startups to get funding from angel investors, startups need to then make significant progress with this capital to continue to receive follow-on growth funding. The increased interest from VCs will help with the search for follow-on capital. Additionally, the investment by a VC will have a multiplier effect on the New Jersey ecosystem as their capital fuels growth.”
JumpStart NJ Angel Network (New Brunswick) is a member-led angel group of successful serial entrepreneurs, business executives and venture capitalists who actively invest in early-stage startup technology ventures in the mid-Atlantic region and beyond.
“To start off, we must recognize the impact that the state’s administration and the NJEDA has had on New Jersey’s ranking in the VC community. The passing of the New Jersey Economic Recovery Act of 2020 paved the way for the establishment of the New Jersey Evergreen Fund; enhanced the Angel Investor Tax Credit Program; and reconstituted the Commission on Science, Innovation and Technology. These (and other programs) have given our entrepreneurial ecosystem the clear message that New Jersey is open for business. And New Jersey’s administration is willing to continue its support.
I must point out that New Jersey’s ranking is not only due to the recent administration’s impressive efforts, but also reflects our long culture of entrepreneurship and innovation. As a rule, significant VC funding comes in at a later stage, and usually after investments by angel investors. We are now seeing the outcome of programs from innovation accelerants such as Newark Venture Partners, TechLaunch, NJII [New Jersey Innovation Institute], NJEDA’s angel tax credits, and many other seed-stage efforts that feed our deal pipeline. New Jersey’s recent PitchBook ranking has its basis in the state’s ability to both foster innovation and stimulate its commercialization potential.
I would say that this progress has been long in coming and will require sustained efforts from New Jersey’s administration, NJEDA, private capital (angels and VCs), university research, and a vibrant entrepreneurial community. Bottom line: The positive news about this ranking points to even more fertile ground in doing business in the Garden State.”
The TechLaunch ( West Orange) business accelerator program is designed around a rolling application process in which early-stage startups receive mentoring that guides them toward investors and a successful due-diligence process. Casabona Ventures (West Orange) invests in post-seed stage companies in the mid-Atlantic region.
Lyneir Richardson, executive director, Center for Urban Entrepreneurship & Economic Development (CUEED), Rutgers Business School, and founder of The Black and Latino Angel Investment Fund of New Jersey:
“Governor Murphy and the NJEDA made commitments to inclusive innovation. The news of more private investment in the state is clear evidence of the effectiveness of the programs and policies.”
CUEED launched and now operates the Black and Latino Angel Investment Fund, which is a group of investors providing seed-stage capital to high-growth, next-economy startups owned by people of color. The Black and Latino Angel Investment Fund brings diverse experiences as New Jersey-based entrepreneurs and successful small business owners, academic leaders, corporate representatives and venture corporation founders.
Harvey Homan, Chapter president, Keiretsu Forum North Jersey (Princeton):
“The intention of Governor Murphy, NJEDA and NJCSIT [New Jersey Commission on Science, Innovation and Technology] has been to foster innovation and economic development in the Garden State. Since 2018, the volume of capital and interest in early-stage venture investing has grown to meet the exponential growth of entrepreneurial activity. I anticipate continued growth of the ecosystem; it is the primary reason we established the Keiretsu Forum North Jersey Chapter. Early-stage startups in New Jersey had a phenomenal showing in 2021; we are positioned to make 2022 look even better, especially in the areas of seed and early-stage.”
According to the Keiretsu Forum Mid-Atlantic website, Keiretsu Forum is “a conglomeration of serious investors, business leaders, venture capitalists, corporate/institutional investors and serial entrepreneurs bound by two overlapping and codependent goals:
- To work together for each other’s mutual benefit, forming strategic partnerships, enhancing each other’s knowledge and building an angel network of diverse skills
- To access promising angel investment opportunities around the world
“With more than 3,000 accredited angel investor members dispersed throughout 53 chapters on four continents, Keiretsu Forum is the world’s largest and most successful accredited investor – private equity community. Since Keiretsu Forum’s founding in 2000, its members have invested more than $1 billion in 950+ different companies from a myriad of industries, including software, telecommunications, health/life sciences, biotech, real estate, mobile applications, Internet, consumer products and other high growth areas.”