New Jersey Innovation Evergreen Fund opened the first Corporate Tax Credit Auction to fuel the fund, according to a Friday announcement from the New Jersey Economic Development Authority.
This is not the typical tax incentive program.
Under the NJIEF, the state will become an equity investor in startups deploying up to $600 million into companies alongside professional venture capital groups. Established by the New Jersey Economic Recovery Act of 2020, the NJIEF is a tool designed to incentivize investment in emerging New Jersey companies.
Not just any companies, these will be startups that have been vetted by venture capital groups, helping to ensure more companies start here, grow here and stay here, the theory goes.
For the 2022 auction year, a pilot amount of $30 million of tax credits will be available for purchase through the New Jersey Corporate Tax Credit Auction. Based on demand, the Authority may increase the amount of tax credits available in the current year. The funds raised from the auction will later be matched by professional venture capital firms and invested into high-growth, early-stage businesses across the Garden State.
“The NJIEF is a unique model for driving investment and other resources for bolstering the success rate of startup companies,” Tim Sullivan, NJEDA chief executive officer stated. “Through the NJIEF, successful New Jersey corporations will help to nurture and elevate the next generation of high-growth businesses. This will lead to job creation and scientific breakthroughs and will help to deliver on Governor Phil Murphy’s commitment to recapturing New Jersey’s global leadership position in innovation and creating the most diverse and inclusive innovation ecosystem in America.”
Sullivan noted that, in addition to benefiting from the purchase of tax credits, corporations participating in the NJIEF will help drive New Jersey’s innovation ecosystem through their strategic engagement with emerging companies in which the NJIEF will later invest.
Auction bids will be evaluated according to price and the specific strategic commitments the bidding company makes to support NJIEF’s portfolio companies and the state’s broader innovation ecosystem, including networking and mentorship opportunities. Once the funding is raised, the NJEDA will partner with professional venture capital firms operating anywhere in the country to co-invest the funds in eligible high growth businesses in New Jersey.
Corporations seeking to purchase the tax credits must commit to supporting the state’s innovation economy through activities such as mentorship, internships, sales and distribution pipeline access, and availability to serve on the NJIEF Advisory Board for one year. Completed applications, including a refundable deposit, must be received by Oct. 7, 2022.
“New Jersey has vast appeal for businesses seeking top talent, a thriving innovation community, and a prime location, and the NJIEF will be an additional tool for attracting corporations and startups choosing to start and grow within our state,” NJEDA Chief Economic Transformation Officer Kathleen Coviello said. “We look forward to seeing the growth that will result from this investment of funding and targeted sharing of intellectual capital.”
