NJBIZ caught up with New Jersey Economic Development Authority CEO Tim Sullivan a day after Gov. Phil Murphy unveiled his latest spending blueprint for the state, a $53.1 billion vision to build the Next New Jersey. The NJEDA will play a critical role in making that vision a reality.
“This is about jobs for our kids,” Sullivan told NJBIZ. “This is about jobs for today. But it’s also about jobs for our kids, and making sure New Jersey is a place where kids don’t have to graduate high school or college and leave to find the right opportunity in a growing, thriving, dynamic sector.”
“A New Jersey that attracts the world’s greatest companies and where small businesses can grow and succeed and, even more importantly, find the dynamic workforce they need,” Murphy said in his speech.
“The governor’s budget proposal is incredibly strong. I thought it hit all the right notes in terms of affordability and fiscal responsibility,” said Sullivan. “And the governor really correctly laid out the connection between those two things and our overall economic and business development climate.”
He stressed that businesses and residents want a place that has great schools, is vibrant, affordable, and has its fiscal house in order.
“I couldn’t be more excited about all the various things that are potentially coming our way at the NJEDA. Obviously, we’ll see what the Legislature has to say about it. And I’m sure there’ll be some more ideas that come our way,” Sullivan said.
Some toplines from the NJEDA’s perspective include: a fourth straight budget with a $50 million allocation for Main Street programs; more than $50 million in new resources to expand the green economy, including a $40 million Green Fund that can leverage both private capital and federal funds; another $50 million in funding for the Strategic Innovation Centers program that supports projects such as the HAX global headquarters in Newark and HELIX in New Brunswick; the establishment of an Urban Investment Fund to work alongside current and proposed business incentive programs to support the arts and creation of parks and gardens, among other urban infrastructure; and a $6 million allocation to support diversity through employee ownership as a way to help bridge the wealth disparity between people of color and the rest of the state.
And, perhaps most important, Sullivan said that the budget proposal will offer the chance to continue programs and initiatives that are already making a major impact and building momentum as the administration works toward the Next New Jersey vision.
In a nod to Murphy’s line about the Next New Jersey being here today, Sullivan echoed that sentiment, citing examples in sectors such as offshore wind, clean energy, film and television, cannabis, life sciences, the innovation economy, and more.
“It’s things like investing in innovation and life sciences, things like the HELIX in New Brunswick, things like HAX, and what’s going to happen at the former Merck facility in Kenilworth,” Sullivan explained. “Those are the kinds of things that we think are really long-term bets that will pay off for the state, and for the Next New Jersey when it’s fully here in five, 10, 15, 20 years from now.”
And speaking of HAX, Sullivan said the team there is knocking it out of the park as the operation gets ratcheted up in Newark. HAX is a startup development program for pre-seed hard tech companies, being overseen by SOSV, a Princeton-based venture capital firm, with support and investment from NJEDA. In August, HAX signed a 10-year lease in Newark for the facility at 707 Broad St. to serve as the U.S. headquarters for the startup accelerator.
“It was a huge win for the state, for the governor, and for Newark when we got HAX to pick Newark as part of a national competition,” said Sullivan. “That was a win in its own right. But what we were hoping to see is exactly what we have been seeing, which is companies coming to Newark, being funded, putting down roots in Newark.”
He said that more than five companies that have been funded are coming through the system, which is gaining momentum. SOSV intends to take 100 companies through the program over the next five years.
“And one of things that’s important to keep in mind when we think about these early-stage companies is that 9 out of 10, 99 out of 100 of these companies, no one’s ever going to hear of them. They’re going to stay five or 10 people. But, if we can get one or two of them to be the next Tesla, the next big thing, the next Johnson & Johnson, the next Merck, we will earn an extraordinary return on our investments,” said Sullivan.
He added that HAX and HELIX are really aimed at trying to strengthen and make the innovation ecosystem more vibrant, to make the soil more fertile for growing, early-stage companies.
“When we get this going right, and we’re not quite there yet, the amount of government involvement/government intervention diminishes over time, because you have a healthier startup ecosystem,” Sullivan explained. “You have more founders. You have more funding coming through the private venture capital system.”
The eventual goal of the administration is to have wellsprings of innovation functioning in places across the state.
In addition to HAX and HELIX, some other notable programs and initiatives on the early-stage investing/startup front for the NJEDA, include: the Angel Investor Tax Credit, a program with a $35 million annual cap that establishes tax credits against corporation business or gross income taxes based on a qualified investment in a New Jersey emerging technology businesses; the Net Operating Loss program, which has an annual $75 million cap to help participants sell their NOL losses and unused R&D tax credits to corporations as a way for early-stage life sciences and tech businesses to obtain cash without sacrificing equity; the New Jersey Innovation Evergreen Fund, an inaugural program under which the NJEDA board approved eight corporations in December to purchase $50 million in tax credits to create public-private partnerships to help fuel investment; and the New Jersey Innovation Fellows Program, a $10 million program set to launch in the spring that supports would-be entrepreneurs with income replacement grants.
2022 was a big year for NJEDA. Take a look at just the month of December:
Sullivan said that these types of programs are being well-received in the startup, early-stage investing circles, and that they received especially positive feedback on their efforts during meetings with companies on a recent trip to California with the governor.
“One of things you have to give Gov. Murphy credit for is being willing to stick his neck out both politically and financially on early-stage investing and innovation,” said Sullivan. “Because when this works, and I’m confident it will, this doesn’t pay dividends on an electoral cycle. This pays dividends on a generational cycle.”
He reiterated that most of these early-stage companies are small and obscure.
“But these are companies, if we hit it right, two or three governors from now will be doing the ribbon-cuttings,” said Sullivan. “And I think you have to give Phil Murphy a ton of credit for being that kind of forward thinking, that kind of long-term investing.”
And as budget season officially gets underway, Sullivan said the NJEDA will continue building on its momentum and efforts from 2022 and now into 2023 as the Legislature goes through its Fiscal Year 2024 budget process, which he hopes results in a few more chips on the table that his office can deploy toward economic development efforts.
“The good news is if the governor’s budget proposal is adopted, we will stay incredibly busy,” Sullivan said. “The challenging news is we will stay incredibly busy. If you see my colleagues looking grouchy or sleepy, it’s because we’re working like hell to grow the economy and follow the governor’s lead. If anything like the governor’s budget is accepted, we will continue to have resources to deploy in programs that are up-and-running and proven successes, as well as a handful of new things.”o