NJ Punches Above Its Weight for VC Funding, Graziano Says


Frank_Graziano_of_Monmouth_Ventures

A presentation at the Venture Association of New Jersey (VANJ) meeting in Whippany last Monday provoked some excellent discussion among participants about the role of N.J.’s government in helping small, early-stage technology and life sciences businesses in the state.

Frank J. Graziano, Monmouth Venture Partners managing partner, spoke about “Who gets funded and why and the current state of funding in the New York region,” and along the way compared and contrasted the entrepreneur-financing ecosystems of New York City and the state of N.J.

While New York is in the top cities in terms of both dollars invested and number of deals, N.J. is in the top 10 states for venture capital investments nationally, totaling $540 million in 2011, according to data from PricewaterhouseCoopers MoneyTree. “We averaged about 17 deals per quarter,” Graziano said, “and just over $8 million invested per deal on average, an amount higher than the comparable figure for New York.” N.J. is also among the top states nationally for investments in healthcare. “For a small state, I think N.J. punches above its weight class” when it comes to funding projects, he added.

New York is the place for young companies to go if they want to be funded in digital technologies, however, Graziano noted. “It’s easy to see where the money is going in New York: Internet, Internet, Internet,” with Internet accounting for 64 percent of all New York deals in Q4 2011. However, N.J. has a healthy ecosystem for healthcare, biotech and pharma, he said. As a place for VC and early-stage investments, healthcare and pharma are rebounding, he added.

“We could have a better venture environment in N.J. and even be the national leader in life sciences venture investing,” Graziano said. “Because we are dispersed and diverse here, we need a unifying factor. N.J. has all the core ingredients to create a vibrant entrepreneur-financing ecosystem.” However, “I see a lack of coordination among all the constituent components of the ecosystem,” he noted. Graziano suggested the state or some umbrella entity could at the very least play a central coordinating role, or an infrastructure platform like Gust.comcould be used by entrepreneurs, investors and other startup community members to collaborate among themselves.

Some audience members agreed with Graziano, pointing out that tech and venture events seem to be scheduled to conflict with one another. Others thought it was unfair to compare the startup ecosystem in N.J. with that of New York, especially along the R train corridor, which Graziano had pointed out is a smaller geographical area concentrated with engineers, VCs, angels, media companies and advertising agencies. This concentration creates the “right soup” for new startups to thrive, he said.

Graziano noted that if you look at deals being funded along the I-95 Corridor, from Boston to Washington, you’ll find VC investments are diversified across sectors. Also, seed-stage investments are becoming more prevalent, with superangels and funds they are developing leading the way, he said. “I am encouraged by this and hopeful these startups will be significant job creators as they mature,” he concluded.

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