NJ Launches State Funds To Invest In New Jersey Startups

NEW JERSEY — Entrepreneurs in New Jersey may be eligible for government assistance as a result of the official establishment of the Innovation Evergreen Fund, which was approved earlier this month.

The plan to establish a new state fund to invest in promising New Jersey-based startups, first announced in 2018 as part of Gov. Phil Murphy's economic development strategic plan, has taken a significant step forward.

The New Jersey Innovation Evergreen Fund was established to help increase the state's access to resources and venture capital. It also aims to foster collaborations between well-resourced corporations and national investors in order to financially support aspiring entrepreneurs.

According to the New Jersey Economic Development Authority, the state will invest $600 million in startups — and not just any startups, but companies that have been vetted by venture capital groups — to help ensure that more companies start and stay in New Jersey.

“The New Jersey Innovation Evergreen Fund is a groundbreaking public-private partnership that will fuel our innovation economy by attracting entrepreneurs and venture capital to the state,” Murphy said in a statement.

The seed capital for the fund will be raised by auctioning up to $300 million in transferable tax credits to corporations registered to do business in New Jersey. Following that, the state intends to collaborate with venture capital firms, which will also be expected to contribute matching funds, bringing the total potential investment to $600 million.

“When entrepreneurs think of leaders in innovation, New Jersey should be at the top of their list,” said NJEDA Chief Executive Officer Tim Sullivan. “The NJIEF will not only serve as a novel approach to investing in entrepreneurs but also a key contributor for job creation and sustainable economic growth.”

The fund's targeted industries, according to Tim Sullivan, executive director of the EDA, include advanced transportation and logistics, advanced manufacturing, aviation, autonomous vehicle and zero-emission vehicle research or development, clean energy, life sciences, hemp processing, information and high technology, finance and insurance, professional services, film and digital media, and other innovative industries that disrupt current technologies or business models.

Who is eligible:

To receive an investment through the NJIEF, a business must:

• Be registered to do business in New Jersey.
• Have principal business operations located in New Jersey and intend to maintain principal business operations in the State after receiving a qualified investment under the program.
• Be engaged in a targeted industry.
• Employ fewer than 250 persons.

To purchase tax credits during the NJIEF auction, a company must:

• Request at least $1 million in tax credits.
• Bid at least 85 percent of the requested dollar amount of tax credits.
• Agree to provide mentorship, networking, and collaboration opportunities to qualified businesses that receive funding under the program, at minimum, in addition to other support of the State’s innovation ecosystem in its bid.

To access funds, venture capital firms must:

• Be qualified by the NJEDA.
• Demonstrate a minimum of $10 million in assets under management at the time of certification.
• Have no fewer than two principals or persons employed to direct the qualified investment of capital with at least five years of money management experience in the venture capital or private equity sectors on the date the determination for certification is made.

The New Jersey Economic Development Authority anticipates launching the Innovation Evergreen Fund later this year.