HAX made a big splash last month when it announced it was making Newark the hub of the global accelerator — and committing to supporting 100 hard-tech companies in an effort to bring manufacturing back to the U.S.
But what kind of companies is it looking to help grow?
Garrett Winther, who will lead the Newark office along with Duncan Turner, explained it this way:
“We’re early-stage investors,” he said. “We’d like to show up in places that people aren’t looking. And then, five years later, people say, ‘Oh, yeah, you guys were right.’”
Winther said HAX, which is part of SOSV, has a pretty good track record.
“We were pretty far ahead on meat made without meat,” he said. “And cryptocurrency was one of our biggest investments, one we made a long time ago, when people weren’t talking about it.”
Now, the group is looking to get ahead of the next big thing: On-shore high-tech, hard-tech manufacturing to help with supply chain issues.
“Everyone’s talking about it,” he said. “Every corporation in the entire country right now is saying, ‘We need to rethink our global supply chains.’
“Every dollar that’s moving overseas is being rethought about how it’s being spent right now. They want to bring it back, but there are capacity issues and capability issues. And that’s where the opportunity is.”
The solutions are not as easily stated, Winther said.
To date, HAX companies have collectively raised a total of $1.8 billion, of which $105 million was invested by SOSV. The current aggregate valuation of all HAX companies is $8 billion.
“It’s not just saying, ‘OK, we need to take the factory out of China, pick up everything and put it here in the U.S.’” he said. ‘It’s actually rethinking, how do you do it in North America to make it work? And that’s what we’re investing in.”
Winther said the company has not picked the location for its Newark headquarters just yet — although it said it will soon and it will be very close to Penn Station. But Winther said HAX could be making its first investment in a company for the office as soon as this week.
“They want to be here,” he said. “We’re looking for temporary space right now.”
Winther talked with ROI-NJ last week during the Propelify festival in Hoboken. Here’s a look at the conversation, edited for space and clarity.
ROI-NJ: Talk more about the companies you’re looking at. For starters, when you say early stage, what are you talking about?
Garrett Winther: We want very early-stage companies. Imagine a Ph.D. student with a prototype of this amazing new climate tech or this new robot who is looking around, saying: ‘What do I do next? How do I grow this as fast as possible? How do I build a team? How do I commercialize the prototype?’
We’re looking for those kinds of companies, where most investors will come in and say: ‘Sorry, you’re too early. This is too hard.’ That’s what we love. That’s who we’re talking to.
ROI: Why Newark?
HAX in Newark: Here’s how the deal works
- The New Jersey Economic Development Authority and SOSV have signed a letter of intent to create a joint entity, HAX Newark;
- The EDA will make an initial investment of $25 million to fund the joint entity;
- SOSV also will commit $25 million, but will do so with a $250,000 initial investment in each of the anticipated 100 companies;
- SOSV will provide 180 days of hands-on collaboration and offer a global founder community for each of the early-stage founders building hard-tech startups;
- The companies in the program also may receive up to $50 million from SOSV as follow-on financing to support them as they grow.
GW: We’re here to get stuff done. Newark has all the things that say: ‘Here’s the foundation to build something great. Let’s show up and do it.’ That’s what we love about Newark. You get to draft off all the great stuff that’s happening here. You can get your hands dirty and start building.
If you put these companies in the middle of nowhere, they’re going to stay nothing. You have to be amongst businesses, amongst capital, amongst people who are building massive things. That’s happening here.
We literally looked all around the country. The fundamentals of how we’re investing around the future of manufacturing infrastructure, supply chains, really kind of how the country works, is here.
You don’t need to be in a high-rise tower paying way too much money to build a robot or industrial facility, you need to be in a place like this. What we saw is, you kind of get the best of both worlds here. Teams can grow here.
ROI: What do you see as Newark’s key attributes?
GW: You’ve got the port, you’ve got the airport, you’ve got the dark fiber that makes it one of the hubs of the internet — and you have connectivity to literally every point in the country and in the world. And then it’s 20 minutes, door to door, from Newark Penn Station to New York Penn Station.
You have the bones of all this great infrastructure and industrial core, access to a world-class ecosystem — essentially, all the things that make America run. This is a place to grow a business. That’s why we’re investing in Newark.
ROI: And you’re not the only one investing. The New Jersey Economic Development Authority also is a partner in this project. Talk about that and how it will help you moving forward.
GW: The NJEDA laid out an incredible package for startups to come here. There’s matching funding and free rents of these great facilities and buying back tax losses and paying for Ph.D.s on your team. Every dollar that we invest is going to feel like $10 to a startup.
ROI: Talk about what companies will get.
GW: We’ll write a $250,000 check. And, if you choose to move to New Jersey, the EDA also is going to write you a $250,000 check. You’re going to have access to our facilities for life. So, you basically have a free office to come hang out with. And it’s going to be an office where 200 to 300 founders — all hard-tech robotics and engineers —are hanging out.
I graduated as a mechanical engineer. If this place existed then, I would have been knocking on the door saying, ‘How do I get inside?’ Because this is a place you want to be.
ROI: How do you see these companies growing?
GW: We want to get companies to the next round of funding. We know, even a half a million dollars doesn’t change the world. Maybe it gets the business going, but you’re not going to make a billion-dollar business on a half-a-million-dollar investment. So, one big thing that we do is have an international network of investors and have demo days in New York City, in San Francisco. We want to get companies into the next major round of funding.
ROI: And then?
GW: If I was to tell this story 10 years from now, I would hope to have companies that have grown to thousands and thousands of jobs. A majority of those jobs will be here. You probably have the first big production facility happening in New Jersey. And those teams are scaling their production, but all the decision-making and money-making is happening here in New Jersey.