NJTechWeekly.com stopped by the HAX space in Newark late this summer to find out how things were going for this hard-tech startup program run by SOSV, a global venture capital firm based in Princeton.
The bottom line: Some 10 startup companies were on-site at this time, working out of temporary offices on the 9th floor at 707 Broad Street and developing their ideas right in the heart of the Brick City. Now there are approximately 25 companies in the HAX space.
We spoke to HAX Managing Director Duncan Turner, Chief Science Officer Susan Schofer and with two founders. We will share the interviews with the HAX founders in a subsequent article.
HAX is a program that invests in hard-tech startups and helps them accelerate their growth; it focuses on companies specializing in climate science, clean energy development, medical devices and the like. HAX offers a $250,000 initial investment plus business, scientific and hands-on technical engineering help, as well as other kinds of support. SOSV’s core mission is to fund visionary deep-tech founders who aim to deliver a radically beneficial impact on human and planetary health, the company says on its website.
The underlying principle here is that startup founders in these hard-tech areas must roll up their sleeves to develop their products. They must also be aware that it can take years for their work to pay off. And without investors like SOSV and HAX — which commit their support at the earliest stage of these companies’ development, stay the course, assist them on their journey to commercialization and ensure that they’re going in the right direction — entrepreneurship is a very rough experience. Many startups in these areas do fail, but HAX support de-risks the companies it invests in, increasing their chances of success.
Plans to Build Out the HAX Facility
When we visited, plans for building out a cavernous 35,000-square-foot space on the 9th floor, complete with wet labs and “garages” suitable for big builds, were moving along, just awaiting permits from the City of Newark. The permits have since been granted. According to Turner, the space should be completed sometime in early 2024.
“We’ve the types of technology that we think are really going to disrupt, particularly within the climate-tech space, and many in chemistry and chemical engineering,” he told us. “And they need a wet lab to be able to run experiments and check that things are scaling as they planned.”
Susan Schofer, chief science officer at HAX | Courtesy Susan Schofer
Schofer added that there’s a lot of excitement about what HAX is doing in the city. She noted that the program is engaging with NJIT, Rutgers and Princeton, among other local universities, “and they’re super excited that we’re here and are just the neighbors down the street. There are lots of opportunities for us to do stuff together, whether that’s hiring interns that are students there, or perhaps using lab space, collaborating with their researchers and even investing in companies that are spinning out from these institutions. We will certainly be using their core analytical facilities for things our teams need.”
Schofer defines her role at HAX as part investor as a partner at SOSV, and part scientist who helps and advises the companies. “The reason for the role is to provide more technical expertise to the companies. What we do is extremely technical, so having someone with a scientific background, [who is] able to make suggestions and evaluate some of the technologies and fundamental science that we see, is important. Once we understand that the technology doesn’t break any rules of thermodynamics,” she said tongue in cheek, “we have to look at this in the context of the market and unmet needs, connecting the science to the business side. I also help the teams think through how they create products from their technology, and I help figure out what facilities, infrastructure and resources we need to serve the breadth of teams within our program.”
Creating a Hard-Tech Ecosystem in Newark
Turner was adamant that most of the companies now in Newark will stay there to build an ecosystem.
“Right now, we’re putting resources in here to keep them here. We want them to learn from each other. You get way more education from somebody who’s been through the program than you do from us because you’re getting that insight from a founder’s perspective versus an investor’s. That’s a key important point for us. Now, there will come a day when the startups outgrow our space. And at that point, we will want to point them to resources and facilities in the area that they can grow into as they scale.”
Maxwell Lares, Industrial Designer at Portable Diagnostic Systems (PDS) in the 3D printing lab at HAX | Esther Surden
Most of the companies in the cohort are prepping for a seed financing round, Turner told us. The first onboarded companies were very early stage; and now, through their time in the HAX program, they have advanced their businesses and de-risked their technologies, and are ready for follow-on investors beyond SOSV.
Meeting the Challenges
While there is plenty to like about Newark, including some great ethnic restaurants within walking distance of the HAX building, great access to transportation to New York and an easy route to the airport, there is one challenge that Turner is working to overcome.
“One thing that we are looking to do now is expand out the amount of capital that we can get into these companies. It’s a challenge that we have with the type of technology we invest in, that there are a large number of investors that invest in hard tech with offices outside of the local area. So, sometimes you’ll see a seed company raise seed financing. They may then go to the place where the seed investor is based. And for us, I think, a strong factor in keeping companies here in Newark and in New Jersey would be the ability to attract more capital from the local area to potentially invest in these companies. That would be phenomenal. And then, once they’ve laid roots here, once they’ve hired staff here and people have got their apartments sorted out, they’ll be settled here, and stay for their long-term growth.”
HAX is still doing some of its electrical engineering prototyping in China, “It is necessary in order to help companies moving at the fast pace required for startups,” Turner said. “However, we’ve cut back our expertise there just to electrical engineering and supply chain sourcing. The engineers who are there are focused on sourcing components, testing them and sending them over here. We assemble the electronics parts with the parts we get made over here. We are trying to build the kinds of technologies that the U.S. needs and, for now, we need other countries to do that. Newark is definitely our global headquarters,” he said. Turner added that HAX also has a presence in India, where “we do a lot of computational engineering.”
Turner also noted that HAX expects to be much more active in the local Newark tech and entrepreneurship community once its space is built out and there is enough room for meetup events and educational opportunities.