SOSV’s new HAX hard-tech startup accelerator program is taking shape in Newark – both conceptually and physically.
Princeton-based venture capital firm SOSV announced a $25 million agreement with the New Jersey Economic Development Authority, which matched the investment, to bring its HAX program to Newark, which was selected as U.S. headquarters following a nationwide search, citing New Jersey’s legacy in innovation and the Brick City’s ideal location for early-stage companies as two of the many reasons. Last August, SOSV signed a 10-year lease for a 35,000-square-foot-space at 707 Broad St. in New Jersey’s largest city.
Construction is underway to transform that space into what will be the permanent home of HAX, which plans to take 100 companies through the program over the next five years, including investing $250,000 in each of the startups, and providing hands-on collaboration, mentorship, access to a global founder community and much more. And even though that permanent space is not set to be complete until around the third quarter of this year, a number of early-stage companies have already come to Newark, operating out of a temporary space one floor above with workspaces and hands-on engineering and tools – such as advanced 3D printing, manual metal fabrication, CNC machining, laser cutting and more – giving a gritty, industrial, startup energy as these young ventures attempt to build companies using innovation to take on major challenges.
“It will take time, but eventually, we expect that the HAX presence in Newark will have generated a slew of high-tech industrial companies helping reshape the U.S. industrial landscape. As we look to a decarbonized industrial economy, we need to completely reinvent the way that goods are manufactured, from base metals to chicken nuggets, hydrogen transportation to gene therapy manufacturing,” Duncan Turner, SOSV general partner and HAX managing director, told NJBIZ. “We are investing in the next wave of manufacturing and health care companies that will put N.J. on the map.”
Turner said the progress has been superb and that its first two graduates – Gaia and Renovate Robotics – got their seed rounds from top VCs. And while the construction continues, so does the recruiting process for more companies to join the HAX program.
“We have been focused on sustainability investments, with a heavy concentration on climate tech over the past few years. The general downturn in the VC sector has not hit climate tech, which remains strong,” said Turner. “We are seeing particularly promising companies in this area. Once our chemical lab is operational, we can invest in even more companies in this space. We are seeing our first international companies choosing Newark as the center of their operations. So far, Newark has been popular with warehouse logistics and automation companies as they serve customers in the region. We think we will see this expand to health care companies in the future.”
“We’re thrilled with the progress. I would say we’ve gone really fast. We got into this space less than a year ago,” Susan Schofer, partner at SOSV and chief science officer at HAX, told NJBIZ. “And now we’re up and running and have 15 companies here in New Jersey that we’ve been able to get going, making investments in, get them up-and-running, serve their needs. A lot of them need lab space that we’re providing as well.”
Anywhere from 20 to 35 companies are expected to be in the space at any given time, since HAX does not run a cohort model as many incubators do. “What we really try to catalyze is that very early stage. So, companies that are in the idea stage or an initial proof-of-concept, we try to get them off the ground with some funding, with some hands-on support, with a community and ecosystem of other founders that they can bounce ideas off of to really get them up and running,” Schofer explained.
She noted that as these companies grow, the next ingredients needed are access to talent, access to space, and access to capital. “I think all those ingredients are here to really turn this into an innovative space, in general,” said Schofer, who also cited the nearby Port Newark as a major reason why the Brick City was chosen for the site.
Turner and Schofer acknowledged the support of the state, especially the NJEDA. Another major development came in November when HAX was approved for NJ Accelerate, the NJEDA’s partner accelerator program. It allows NJEDA to match investments made in HAX startups so long as they locate in New Jersey within six months after graduating. The match is in the form of a direct loan up to $250,000. Renovate Robotics, which builds robots to automate the installation of shingles and solar panels on single-family residences, was the first loan recipient at HAX.
“They [NJEDA] have programs to fund early-stage innovation. And they’ve been really helpful around coming here to be onsite to be able to explain that. Because it’s not always easy to navigate through the government website and understanding the program,” said Schofer. “They’re great about coming here.”
“We cannot thank the NJEDA enough for their unwavering support for what we are building here,” said Turner. “Their vision and determination does not stop, and we look forward to growing our impact with their help. In particular, we would like to call out Kathleen Coviello, Kevin Lynch, and Tim Sullivan as true leaders helping to shape this ambitious project.”
The HAX team also acknowledged how welcoming the City of Newark has been.
“We continue to feel welcomed by the community in Newark as we meet more and more stakeholders. For example, we are immensely thankful for the relationship with NJIT [New Jersey Institute of Technology], who have graciously given our founders access to their labs,” said Turner. “Newark has been the source of really high-quality interns from NJIT, without which we would not be able to move at the speed we need to.”
The space itself, still under construction, is huge with views of Newark. The floor will feature coworking space, a machine shop, advanced chemical wet lab, 3D printing space, walk-in hoods to help founders de-risk their chemistry and physical science, a meditation room, a kitchen and dining area, a presentation space, and more. There will also be a set of garages that will house different companies as they grow and want to take the next step but remain at the HAX facility.
Sophie Helfend, HAX’s Business Development Manager, who led the tour, said that the space will feature an industrial feel but with modern touches, amenities and tools. “The goal is to have 100 companies start and prosper here through this space,” Helfend told NJBIZ. “We’re really trying to position it as a new mecca for innovation in Newark.”
Helfend stressed that the goal is to have the space be a one-stop shop where founders have the resources they need to expand their companies, from the physical tools to the startup culture to mentorship to access to investors and more. “I’ve talked to founders and there’s a really special relationship that founders have with one another because they go through these hardships together,” said Helfend. “They have that here. They’re able to foster that relationship here. And also, the investment team is here. If they also have questions about a cap table or how to get more money, or with a pitch deck, the investors are also here to answer it.”
Schofer said it is exciting to work with these young companies and to perhaps play a role in that early-stage development, pointing out that it is a high bar to get into the HAX program with only a small number of applicants accepted. Criteria include having a theme of human and planetary health, a focus on hard tech and physical sciences, as well as a clear market if the technology succeeds.
“Then it’s really the team. And that’s ultimately, in a way, the most important,” Schofer explained. “Do we believe this team is the one to execute on this problem? Do they have a way to solve this? And do we think this is a team that we can work with? Will they be a positive for our ecosystem? We invest at such an early stage and it’s important we feel like we can work with them and that they’re open to feedback.”
Three founders at the ground floor of the HAX program shared the stories of their companies and entrepreneurial journey with NJBIZ.
Jonathan Vardner is the founder of Still Bright, which uses transformative reaction chemistry to enable the rapid, clean and complete recovery of copper. Vardner pointed out that copper demand is growing due to the emergence of wind and solar technologies, which require about five times as much copper as fossil energy sources, and electric vehicles that require about two to five times as much copper as traditional vehicles. But the metal is expected to be in short supply in the coming decades due to the high costs associated with the mining, concentrating and processing of copper ore. That’s why new technologies are needed to sustainably provide cheap copper refined domestically rather than produced by smelting overseas.
“We’ve developed a sustainable approach to produce copper from copper ore,” Vardner told NJBIZ. “There’s going to be huge demand for copper. In the next 27 years, the world needs to produce more copper than has been produced for the past 3,000 years.”
He started Still Bright in July 2022 and has been at HAX since January. Vardner said the difference between HAX and other incubators is the engagement level and access to the investment team and other resources. “The team at HAX is a lot more hands on with the portfolio companies compared to any other investor,” said Vardner, who hopes to execute a seed fundraising round in the next year. “The seed funding round is kind of the ultimate goal, the ultimate milestone. And we have other milestones that we’re trying to cross off before executing that seed round. Some of them are technical where we’re trying to achieve these objectives in the laboratory in order to demonstrate that our process works. Some of them are more business-oriented where we want to form partnerships with certain copper mines or form partnerships with engineering firms potentially.”
Daniel Weinstein is the chief executive officer and co-founder of Lura Health, which is making the first wearable sensor for saliva diagnostics. The company launched in Boston and then headed to the HAX program in Shenzhen, China, before the pandemic hit in 2019. After staying there for about 18 months, Weinstein and co-founder Noah Hill went back to Boston for a time before hearing about this HAX location and eventually coming to Newark a few months ago.
“The vision is to monitor a whole bunch of health conditions, chronic disease, drugs, you name it, with saliva instead of blood, and do it in a continual way,” Weinstein told NJBIZ. He explained that saliva diagnostics is already a huge industry, but requires testing done at a lab. Lura Health is making a microchip that can go inside the mouth or be worn on a tooth that can continually track saliva diagnostics. They are in the middle of raising a $2 million round of funding with more than half committed and are working toward getting products in the hands of their first corporate customers.
Weinstein said things have been great in Newark so far, acknowledging that they are still in the early days. But he also had unique perspective having operated out of the HAX facility in Shenzhen. “One of the reasons we were so confident to come here early days is because we know what’s in store,” said Weinstein. “We’ve seen the finished product in Shenzhen. It’s going to be massive.”
When asked about moving from the Boston/Cambridge area to New Jersey, Weinstein said that his company seemed like a small fish in a big pond. “Unless you’re raising a $100 million round, no one really bats an eye. But I think in New Jersey, it’s more of a grassroots-type community. From day one, NJEDA comes to the offices. They tell all the startups about the programs,” said Weinstein, who did not feel that Massachusetts economic officials were as similarly approachable, especially to younger startups. “And I feel like New Jersey, they really want people to succeed.”
Weinstein said he believes Newark will rank among the most active early-stage hardware locations in the world. “We’ve already seen HAX companies raise enormous Series B, Series C, like hundreds of millions,” Weinstein explained. “You’ll see pretty soon some HAX companies here will be raising that type of amount. Hopefully, we’ll be one of them. I think we will. But it’s going to be massive. All the activity that HAX does will put Newark on a global stage. I have zero doubt about that.”
And I feel like New Jersey, they really want people to succeed. – Daniel Weinstein, CEO and co-founder of Lura Health
Glennon Simmons is the co-founder and CEO of Portable Diagnostic Systems, a biotech startup that is making a microfluidics-based, portable invitro diagnostic testing platform.
“What that means is we’re making a portable device that can detect many, many different analytes using a very small volume of fluids,” Simmons, a Robbinsville native, told NJBIZ. “Right now, our sample size is only 10 microliters. So that takes a couple seconds to collect and then we can do all of those measurements.”
Portable Diagnostic Systems is launching in the forensic toxicology space because the Food and Drug Administration (FDA) has regulatory discretion, and they choose not to regulate drug tests labeled for forensic use only, Simmons explained. “So, we’re developing drug tests first,” said Simmons. “We’re trying to impact multiple different areas where we’re developing a roadside drug test for law enforcement. We have a cause-of-death test that we’re developing right now. And, then a neonatal toxicology test.”
Simmons described how the pandemic affected his company’s development. When COVID-19 hit, he already had the technology, and was looking for ways to enter the market and for a use of the technology beyond the pandemic. So, he looked toward the issue of drug abuse, which was, of course, exacerbated by the mental toll of the global pandemic. “It made it so much worse. And that was our prediction. And we just wanted to be there ready to provide a solution,” Simmons explained. “We’re launching in this space, but our ambition is much bigger. We want to be a next-generation clinical diagnostic technology that can be used on an ambulance or in a major hospital.”
The company launched as an LLC in 2019 and took an investment from HAX last year. Simmons said the next steps include getting the company’s hardware to the point of completion, followed by pilot studies scheduled with target customers in the next few months.
Being a New Jersey native, Simmons said he was excited to be on the ground floor of this venture here in the great Garden State. “I see it as being transformative for Newark and bringing in all these different startup companies, hiring a lot of people, and hopefully making Newark a hub for innovation,” he said. “I think that’s what HAX is going to do. It’s got all the raw ingredients.”
And he stressed that there is a pride in being part of a culture and a community like this, especially since, as he pointed out, the entrepreneurial journey is not a smooth one. “It’s a rollercoaster ride being a startup founder. We all have problems that sometimes come out of nowhere,” said Simmons. “And the people ahead of you have been through it before and can give you really good, solid advice. Then you pay that forward. And that’s what’s motivating to be here onsite every day.”
Schofer said there is momentum behind the efforts to build out the innovation ecosystem in this area, which had been lacking for some time. Those efforts include formalizing the processes and building out the spaces, so they are available to the founders, who they then try to grow out of them and make them available to the next groups, to create that movement within the ecosystem, pointing to places like California and Massachusetts that have that type of infrastructure in place.
“I think we’re in the early stages of that. And until we really build that critical mass and there’s flow coming in and maybe going out, then we’re not quite there yet,” she explained. “But that’s the opportunity.”
“Near-term is all about getting into the new space, ramping up the number of companies that we can bring to Newark, and making more connections to the local area for talent and suppliers,” said Turner. “Long term, we want to put Newark on the map as a perfectly located tech hub that can re-energize the industrial ecosystem and bring jobs to the area.”