The startup state? – NJBIZ

The COVID-19 epidemic has resulted in an economic earthquake, but experts say New Jersey’s viable startups can count on one thing: thanks to the state’s solid base of intellectual and other capital, the flow of venture capital shouldn’t dry up anytime soon.

One of the Garden State’s strengths, being near to a major financial center, is baked in, according to Thomas Wisniewski, managing partner at Newark Venture Partners. “Newark, especially, has the proximity — 19 minutes by train —  to New York City networks and financial resources,” he said. “That comes without the burden of Manhattan and Brooklyn costs of living and costs of business.”

Newark and the greater New Jersey community also boast “an incredible group of engaged corporate citizens that want to see a booming local economy,” he added.  “There is also a robust talent network here. Between Rutgers, NJIT, Princeton, and so many others, we have a ton of bright young people, hungry to work in tech startups.”

Wisniewski also credits the Murphy administration with reinforcing those advantages. “I think the state is trying to be innovative when it comes to their approach to growing the local economy and job creation,” he noted. “Gov. Murphy recognizes that the need isn’t just job creation, but it’s the creation of new career pathways, expansion of the innovation economy, and investing in growth sectors.”

Murphy’s proposed public-private Innovation Evergreen Fund, which would leverage tax credits and funds from venture capital firms, would also “be a way of encouraging more VCs to be active in the state, as well as more startups to come here to access that capital,” added Wisniewski. “We’re supportive of it and think it has potential to energize New Jersey’s already growing startup ecosystem.”

Montclair State University has appointed Carley Graham Garcia executive director of the Feliciano Center for Entrepreneurship and Innovation, effective Sept. 3.


Other players in the startup space are also bullish on the state and its plans. “Sometimes circumstances lead to businesses needing a bit of a boost,” said the executive director of Montclair State University’s Feliciano Center for Entrepreneurship and Innovation, Carley Graham Garcia. “We’ve seen that with federal bailouts, and incentives that help spur businesses to stay here and grow are helpful.”

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Programs like the Small Business Fund and others that are administered by the New Jersey Economic Development Authority, are all helpful, she added. “The Evergreen fund, Golden Seeds, which focuses on women-led businesses, and others are all encouraging. Another, the NJEDA-administered NJ Ignite program, also helps to incentivize business creation and retention in this state.” NJ Ignite provides rent-support grants to eligible early-stage technology and life science companies.

That kind of help was important even before the current economic upheaval that came with the COVID-19 rampage. “Unfortunately, a lot of our kids go elsewhere to work or to build a business,” said Garcia. “So brain drain is a challenge — although 79 percent of Montclair State graduates do stay here — and we need to continue to work on ways to keep people here.”

The “robust community of small companies and investors” is encouraging for VC activity, according to Aaron Price, chief executive officer of the New Jersey Tech Council, which provides access to financing and other resources to technology companies. “There’s a lot of talent here, businesses like the close proximity to New York City, and there’s a big commitment to new businesses in New Jersey. Some examples are the way PSEG has committed to clean technology, and Murphy’s interest in offshore wind energy projects.”

That kind of support was one reason why Price sold his company to the NJTC in 2019. He became CEO of NJTC when the deal closed for Propelify, which brings entrepreneurs together, creates custom content and events, and organizes the Propelify Innovation Festival, which he said draws thousands of entrepreneurs, influencers, and policy makers.

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“Other potential buyers, including a media company, had expressed interest in buying Propelify,” Price recalled. “But they were in New York. That wasn’t the only reason I went with NJTC, but it was part of it. I didn’t want to lose the New Jersey part of my mission.”

Some hurdles

The state does present some challenges; high taxes and the overall business climate are often cited as big negatives. The state ranked dead last in the 2020 Business Tax Climate report by the libertarian-leaning Tax Foundation, for example.

And after Murphy announced his plans for the Innovation Evergreen Fund, Ian Hathaway, a board member and senior fellow at the Center for American Entrepreneurship noted that, “One of the most important things of all is to make New Jersey a place where well-educated founders, management, technical teams, and their employees will want to live, work, and raise their families. The value of these indirect policies as a mechanism for entrepreneurship policy is often overlooked in the rush to use direct, blunt force objects that are more familiar to government officials. Young- and mid-career professionals value quality of place tremendously, and with the option to live in New York City and Philadelphia, it is critical that any talent attraction strategy be centered around quality of life.”

“Taxes do matter,” concurred Garcia. “Transportation is another challenge in New Jersey. “Things would be easier for entrepreneurs it was as easy to get to downtown Newark as it is to go from Manhattan to Brooklyn. So it is harder to move people around here by public transportation. But we also have an incredible, diverse and well-educated workforce, so the challenges are not insurmountable.”

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Mukesh Patel, assistant professor of professional practice at Rutgers Business School, warned that “[i]n recent years, the state’s ability to remain a leader in terms of new venture creation, venture funding, attracting startups and small businesses from external regions, resources to support scalability, and commercializing our discoveries has waned. At a minimum, it has not achieved its true potential.

Interest and enthusiasm in supporting innovation remains fairly high, as demonstrated by the plethora of organizations and initiatives to support inventors and entrepreneurs created over the past decade. However, these efforts have been fragmented and diffused and actually might have spawned a proprietary culture that has not unleashed the potential of strong collaboration.”

But he does see some bright spots. “Venture capital will follow strong entrepreneurial ecosystems, innovative founders, sound business models, and scalable and often-disruptive ideas,” he added. “New Jersey has a number of these elements, including a strong academic system including numerous top public and private research universities that produce an educated workforce and intellectual property. It also has geographic access to major cities, a strong transportation hub including airports, shipping ports, and public transportation, an advanced commercial economy, and a density of population. The state has a history of innovation and entrepreneurship going back to the days of Edison and Bell Labs to the pharma and bio-tech corridor. These should allow the state to be a strong magnet for venture capital.”


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