You have heard this before: The tech scene in New Jersey is full of potential. It’s just not full of investment dollars. Our state lags behind most of our neighbors — especially New York, which has 15 times the venture capital investment even though its population is only twice as large as New Jersey’s.
Here’s how we can fix it:
To be a home for innovative startups, our state needs to go many steps further than our competitive neighboring states. Startups in New York’s specific tax-free zones have zero tax liability for their first 10 years of operation. We need a policy that is 10 times better. Let’s make the entire state a tax-free startup zone for 10 years — and 20 years for those that locate in zones of focus. That will give any founder and investor powerful incentives to consider New Jersey. It’s a bold move, but it is both attainable and necessary to support New Jersey entrepreneurs.
That’s just the start.
We also need to ensure that the capital needed for these startups remains in our state. One way to do this would be to eliminate the capital gains tax for startups or companies wishing to sell their company or shares in the state. This would attract more New Jersey-based startups and drive companies from out-of-state to relocate to and stay in New Jersey.
Not only would this initiative give New Jersey an advantage to its surrounding competitors, it would provide opportunities for capital investors and other nationwide innovators to foster connections with early-stage startups, generating the capital needed for startups to stay in New Jersey.
And there’s more:
To help maintain the state’s competitive edge, New Jersey needs to allocate funding to advance the creation of more innovation labs in local communities. Innovation hubs come in many different varieties and draw in cross-functional expertise and talent, cultivating a collaborative environment that is beneficial to building connections and community among local entrepreneurs. How about the state funding a program through which organizations can lead mentorship programs and participating mentor companies can earn free rent?
We’ve been focused on our large corporate citizens leading the way. The fact is, they are more inclined to follow local grassroots innovation that is authentic to our varying needs and neighborhoods. Increased statewide funding for innovation labs would ensure local leaders can thrive and that startups stay in New Jersey by equipping founders with the investment capital and space to get their businesses started and running.
Everything else appears to be in place. Consider:
- We are one of the best-educated states in the nation, with the fourth-highest percentage of adults with a bachelor’s degree and the highest density of science degrees in the world;
- We are one of the most diverse states in the country, which is yet another opportunity for us to empower our minority and female leaders;
- Some of the best universities in the nation are here, including the No. 1 university in the world, and we’re a Top 5 home to Fortune 500 headquarters.
None of this, of course, is by accident. Our geography is prime. We have access to all of the economic resources of New York City and Philadelphia, as well as all of the resources that make New Jersey an ideal place to live and raise a family. What we need to prove is that New Jersey is also an ideal place to start and grow a business.
Gov. Phil Murphy has been a strong partner to the innovation community, shining a light on what’s possible and championing our innovation community. The state and the New Jersey Economic Development Authority have made big strides in the right direction. We must continue with bold ideas that drive our economy to the future.
The right combination of financial incentives and aggressive, supportive policy will enable our state to realize its full innovative potential to invent the future, here in New Jersey.
Aaron Price is the CEO of TechUnited: New Jersey and founder of Propelify.
