NJ EDA Creates NJ CoVest Fund to Provide Growth Capital to Tech, Life Sciences Companies

Photo: Kathleen Coviello of the NJ EDA Photo Credit: Esther Surden
Kathleen Coviello of the NJ EDA | Esther Surden

While funding for very early-stage tech companies has been on the rise in New Jersey, there is still a funding gap for companies in the stage between product development and commercial expansion.

To help fill that gap, the New Jersey Economic Development Authority (EDA) announced the creation of the NJ CoVest Fund. This fund will only invest in companies that have patents on their products, and there are other requirements that narrow its applicability to tech startups.

“EDA sees the new NJ CoVest fund as a complement to our existing suite of products. We have seen an explosion of early-stage support in the New Jersey community, including university support and spinouts, meetups and accelerators. This funding resource is a natural complement to provide much-needed capital to the ecosystem,” said Kathleen Coviello,director of the Technology & Life Sciences Division of the EDA, in an email to with NJTechWeekly.com.

According to the EDA, the $3 million NJ CoVest Fund will provide seed financing to New Jersey-based early-stage tech companies in the form of convertible notes with warrants. Qualifying companies will be eligible to receive from $100,000 to $250,000, but the companies must match every $1 in CoVest funding with $2 from private outside investors.

CoVest funding will feature a 3 percent interest rate and 10-year maturity, with no payments due for the first seven years. In order to take advantage of the funding, recipient companies will have to take a lien on their intellectual property.

According to the state, in order to be eligible, a company must:

  • be product-based and capital-efficient in the technology or life science industries;
  • be a developer/owner of protected, proprietary technology;
  • demonstrate revenue derived from product sales to a minimum of three verifiable commercial customers, excluding revenue generated from research, grants, consulting, or any other method that could be considered service-based;
  • have a scalable business model and target a large, addressable market;
  • have a product that includes, but is not limited to, a working prototype or platform currently in pilot/beta testing or in the market, and that has gained traction in the form of generated revenue/sales;
  • have 75 percent of its full-time employees based in a physical commercial office, coworking space or incubator facility in New Jersey;
  • remain headquartered in New Jersey for five years after conversion or repayment of the note, except in the event of a merger or acquisition;
  • have a minimum of two full-time founders on the management team at the time of application, and these founders must have a financial investment in the company; and
  • must be registered to do business in New Jersey and be in good standing.  

A complete list of the NJ CoVest Fund guidelines and company requirements can be found at www.njeda.com/njcovest. The EDA expects to start accepting applications in the third quarter of 2017.

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