Accelerators key to tech startups, but scarce in NJ

“We just didn’t have the track record or scale to qualify for a line of credit from a bank,” De Clercq said. “There was a problem in this market that was not being addressed if I couldn’t get financing for a $1 million business.”

When he saw his sister raise $20,000 for a ground-level business on Kickstarter, De Clercq got the idea to start a new venture called Kickfurther, a crowd funding site for established companies like CPG.

But he needed the help of an accelerator to launch this new business. The only problem was that he couldn’t find the right fit here in the state.

And it’s not unique to De Clercq. Technology industry experts say New Jersey lags behind other markets when it comes to accelerators for budding businesses and entrepreneurs.

David Sorin, a managing partner with McCarter & English and head of the firm’s Venture Capital and Emerging Growth Companies practice, calls this climate a “commentary for the work to be done in the state so we lose as few of these companies as possible.”

“We do a lot, and it’s important to recognize that,” he said. “But while we do a lot, my fear is that it’s never enough, and there are several accelerators throughout the country who attract businesses and pull them away from the state.”

Sorin also echoed this concern: the accelerators that do exist within the state are not well known nationally.

“There are very good accelerators in New Jersey,” he said, “but they lack the national reputation for excellence and national contacts in the venture capitalist community.”

Unlike incubators, which engage startups at an earlier stage and are less selective, accelerators place select companies on track toward pitching to investors. That means giving them a larger cash infusion and connecting them with mentors and other contacts — all on a structured schedule that lasts a few months.

Those are few and far between in New Jersey, but there is one high-profile new addition to the list this year, thanks largely to Audible.com. In July, the Newark-based audio book giant said it was launching Newark Venture Partners, a $50 million early-stage venture fund and 25,000-square-foot co-working space inside its headquarters building.

“I think the one in Newark was a significant development because it has a lot of funding,” said Dennis Bone, director of the Feliciano Center for Entrepreneurship at Montclair State University. “(Audible CEO) Don Katz, is involved as well as angel funders. It seems to have a very good start and I think that’s a good signal.”

It comes three years after the launch of two of the accelerators — Innovation Garden in Princeton and TechLauch in Kinnelon — that are well established but still suffer from a tepid technology sector in the state. And that’s not necessarily a reflection of the quality of those accelerators, Sorin said.

“New Jersey was relatively late to the game; (it’s) relatively new in the accelerator space,” he said. “If you are an accelerator-bound entrepreneur, your choices are limited.”

Startup and venture capitalist consultant Frank Vallese, CEO and president of ePhysics in Montville, said the need for accelerators is there, but the supply within the state is lacking. That’s especially when it’s compared with the proliferation of accelerators across the Hudson River, which are coming from unexpected places like BMW.

“If you look at New York City, the number of accelerators is growing very quickly and people you had no idea would be having an accelerator create one because it gives them access to startups,” he said.

And while new developments such as Newark Venture Partners may be a step in the right direction, Vallese isn’t sure that program has found a solution, either.

“I struggle with that one, because I’m looking at New Jersey and there are not a lot of accelerators that are coming in to the state and they’re coming up, which is great,” he said, “but who is asking the question, ‘Why aren’t there successful accelerators in New Jersey?’”

Despite all this, there’s a possible silver lining to De Clercq’s story: He hasn’t forgotten where he’s come from and he has said Kickfurther would “eventually like to open a corporate office in New Jersey or New York.”

That deal, however, is still up for grabs.