Before it became clear that the federal government would guarantee access to all deposits in the crashing Silicon Valley Bank, Gov. Phil Murphy and the New Jersey Economic Development Authority wanted to know what could be done to bridge the gap.
TechUnited: New Jersey surveyed its membership to assess the impact to the regional technology community. We quickly learned that over 500 jobs were at risk and over $25 million in deposits. Many in our community were devastated:
- “Our payroll provider processes payroll via SVB. Our Friday payroll was impacted and our team didn’t get paid, even though the money debited our account.”
- “Need $150,000 to keep lights on.”
- “Not able to think.”
With input from TechUnited:NJ and the survey results, the NJEDA acted swiftly to launch three new programs to support struggling companies:
- The Entrepreneur Support Program: Provides $5 million to guarantee investor loans up to 80%;
- The Angel Match Program: Allocates $20 million to match up to $500,000 in direct investments from angel investors;
- Emergency Liquidity Fund: Provides a $10 million fund to support companies with over $250,000 in deposits at SVB.
TechUnited, which consulted with the Governor’s Office and the EDA on these new measures, is a particularly strong supporter of the Angel Match Program. The crisis had shown the importance of liquidity — 38% of the respondents responded that the SVB situation was “devastating” and likely to put them out of business — and the Angel Match Program would be a direct lifeline.
As we continue to strongly advocate for significantly more investment in New Jersey-based technology companies, this highlights an opportunity we see for New Jersey to markedly stand out.
Over the last few months, we have been working with the Legislature to increase the Angel Investment Tax Credit from 25% to 75%. This would make New Jersey the national leader in angel investment incentives and attract investors to our technology, startup and innovation economy. With an increase in the Angel Investment Tax Credit, we can dramatically incentivize funding for emerging companies and entrepreneurs all across the state.
Had our recommendation already been law, angels would have favored New Jersey as the place to source startup investment opportunities.
If the collapse of Signature Bank in New York wasn’t a big enough signal, the latest developments with Credit Suisse show the impact of the SVB failure on the banking industry is not going away quickly — despite the quick actions of the feds.
Initiatives to correct banking practices that led us to this place remain the top priority.
We appreciate that the governor and EDA acted rapidly. We must remain vigilant and work to foster an environment that encourages innovation and investment, and, moreso, gives New Jersey startups an outsized advantage for technology and innovation to thrive. Increasing the Angel Investment Tax Credit could be a great start.
At TechUnited:NJ, we’ll continue to push the envelope for what we can do to create that differentiated advantage for companies in our community. It’s time for us to take our place on the national stage as a leader in tech and, with the right support, together, we can make it.
Aaron Price is the CEO of TechUnited: New Jersey.