A year ago, no one could have imagined the health and economic devastation of the novel coronavirus pandemic. On August 25, Governor Phil Murphy presented his budget proposal for the next nine months, which the Legislature is currently considering. Much of the headlines about the need to make up for a short-term loss of billions of dollars in revenue is that it’s critically important that we focus on long-term investment in people, small businesses and jobs. .
As we prepare for the future, supporting New Jersey’s innovation economy must be a top priority. Not only are innovative companies developing treatments, equipment and applications that we can use to better understand and combat COVID-19, but they are also the companies best positioned for rapid and flexible growth, which will be vital in bringing back our neighbors to work in well-paying jobs that last.
One of the most interesting of these ideas is the New Jersey Innovation Evergreen Fund (NJIEF). Originally offered in 2018 as part of Governor Murphy’s Economic Plan, the fund is already enjoying broad support from leaders of New Jersey’s innovation ecosystem.
The NJIEF combines the proceeds from the sale of future tax credits with private venture capital funds to create a stand-alone investment fund without any budget allocation or use of taxpayer money. To increase the initial pool of public funds, we will be auctioning tax credits to companies registered to do business in New Jersey. In addition to the dollar amount of their offerings, companies will be evaluated based on the commitments they make to support other startups that receive funding under the program. This will ensure that businesses launched in New Jersey have strong training and mentoring opportunities to help them grow here in the Garden State.
The tax credit auction will raise about $ 50 million each year for a total of about $ 250 million over five years. At the same time, private venture capitalists will be able to join the fund by matching public capital at least dollar for dollar. This matching program will bring the initial capital to $ 500 million.
A win-win for New Jersey
These private venture capitalists will also lead the investment of these funds in New Jersey companies. This is a win-win situation for our state, as these investments will not only provide essential capital to businesses that will create high-quality jobs, but the return on those investments will flow back into the fund, making it “permanent.” Or stand-alone. to perpetuate future generations of startups. This will allow us to continue supporting New Jersey’s innovation economy for years to come without a general fund allocation.
According to a report by the New Jersey Business & Industry Association, this is a more than 60% increase in New Jersey’s investment in start-ups and a good start, but still far behind Massachusetts and New York.
Recovery will be a long process with its own challenges and frustrations. Planning now and taking proactive steps to lay a solid foundation will be crucial in making it as efficient and fair as possible.
New problems require innovative solutions. It’s a good thing that innovation is one of New Jersey’s greatest strengths.