Green wave: Murphy continues push for new innovation venture fund

By Anjalee Khemlani
North Brunswick | Mar 20, 2019 at 12:37 pm

Gov. Phil Murphy’s administration has been talking about the Innovation Evergreen Fund since October, but no legislation has yet been passed to create the tax incentive-based venture capital contribution system.

Gov. Phil Murphy at the Commercialization Center for Innovative Technologies.

Facing a June 30 deadline of the sunsetting of existing tax incentives, and aiming to pass his own new incentives, Murphy has taken the idea on the road, pitching the fund to any startup-heavy region — even overseas in Berlin and Tel Aviv.

He pitched the idea again Wednesday a little closer to home, at the Commercialization Center for Innovative Technology incubator in North Brunswick.

“In 2007, New Jersey ranked fifth in the country in terms of venture capital … roughly $1.3 billion,” Murphy said. “Over the ensuing 11 years, we not only dropped 10 spots, but the amount of venture capital finding its way into New Jersey startups has been cut in half. In the venture capital world in the United States, if you’re not in the Top 5, you might as well be 50.”

Which is why the governor said the Innovation Evergreen Fund, backed by proceeds from auctions of tax incentives to companies in the state, would help grow interest.

In fact, just the idea already has, according to Economic Development Authority CEO Tim Sullivan.

“Our phones have already been ringing from people who have heard about this fund, from places as far as Europe and California,” he said.

EDA CEO Tim Sullivan talking about the proposed fund.

The idea of the fund is that the state brings the funding to a venture firm, which will match it and then invest in startups.

If all goes well, the return on investment is reinvested in the fund. Once the fund is self-sustaining, additional funds could find their way into the budget to help support certain projects and agencies, Murphy said.

This is a win-win for the companies seeking tax breaks and a state trying to reinvigorate its venture capital sector, he said.

“They get to win if they pay a good price for the tax credit that helps them shield their tax exposure, but we need more than that,” Murphy said. “We need to understand what their plan will be for care and feeding and getting involved in places like this — mentoring young STEM students, coworking spaces that they might provide, to pick some examples. This would be a partnership with both the businesses that we need to grow our economy, with those believing in those businesses.”

Assemblyman Andrew Zwicker (D-Monmouth Junction) also attended the event at CCIT and supported the idea of the fund, saying more collaboration is needed in the state.

And Sullivan said that, without the tool, it’s as if the state is “fighting with one arm behind our back.”

The fund, according to the trio, would bring back venture capital that is now flowing to competitors like New York and Massachusetts.

“The Innovation Evergreen Fund is how we can bring this venture capital back to New Jersey,” Murphy said.

Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem