The New Jersey Innovation Evergreen Fund, a program in which the state becomes an equity investor in startups that has been a favorite of Gov. Phil Murphy’s since it was first proposed in 2018, was approved on Wednesday by the New Jersey Economic Development Authority (NJEDA) Board
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 while
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.
“The New Jersey Innovation Evergreen Fund is a groundbreaking public-private partnership that will fuel our innovation economy by attracting entrepreneurs and venture capital to the state,” said Gov. Phil Murphy. “The NJIEF draws on the strengths of New Jersey’s world-class corporate leaders to create a steady stream of investment and expertise that will nurture the next generation of innovators. By fostering investments in entrepreneurship and start-up companies, we are driving job creation and economic growth for New Jersey.”
The seed capital to launch the NJIEF will be raised by auctioning up to $300 million in transferrable tax credits — with an annual cap of $60 million during each of the first five years after program launch — to corporations registered to do business 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.
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.
“When entrepreneurs think of leaders in innovation, New Jersey should be at the top of their list,” said NJEDA Chief Executive Officer Tim Sullivan. “The NJIEF will not only serve as a novel approach to investing in entrepreneurs, but also a key contributor for job creation and sustainable economic growth. Today’s announcement serves as a testament to Governor Murphy’s leadership in growing NJ’s innovation economy by investing in New Jersey companies and startups.”
“The NJIEF is a game-changing program that will catalyze venture capital investments into New Jersey startups,” said Kathleen Coviello, NJEDA’s Chief Economic Transformation Officer. “The state’s role as an equity investor will encourage established corporations to commit capital and knowledge-sharing resources, creating a dynamic cycle of innovation.”
