Gov. Phil Murphy pitched the state’s selling points to a crowd of several-dozen startups and private venture capitalists at an event in Newark on Thursday as he works to drum up support for his economic master plan.
Chief among his proposals is the $500 million Innovation Evergreen Fund that would be used to fund life sciences, financial technology, digital media and cybersecurity startups looking to open up shop in the state.
“Venture capital over the past five or six years in New Jersey is down 40 percent; the rest of the country is up 200 percent,” Murphy said. “We want to get back.”
Murphy said the state would auction off up to $50 million in tax credits a year, while private investors would match the other half. The state would use the fund to grow startups, and in a best-case scenario, returns on investment would go back into the fund, making it self-sustaining.
The Legislature would have to approve the evergreen fund since it would be the Economic Development Authority’s tax credits up for auction.
Murphy called the funds “the oil that you need to make the engine go.”
The EDA-hosted Founders and Funders event took place Thursday at Newark Venture Partners, a B2B accelerator based in Newark. The event was designed to serve as a “speed networking” for startups and investors to connect.
Many of the investors said they have kept their eye on New Jersey for some time with hopes of moving into the state. One such investor is David Logan, founder of the Connecticut-based crowdsourcing company Umergence.
Other VCs already have a presence in New Jersey, such as the Fort Lee-based Double 18 Capital, and some see Murphy’s evergreen fund as a huge opportunity to scale up their local investments.
“We want to invest super-local,” said Zev Scherl, one Double 18’s founders. The plan Murphy laid out, he said, “should have been done a long time ago.”
The new innovation environment in the state would allow Double 18 to find new partnerships and pools of capital, including “local management and local funders.”
“It’s a local system, you can’t emphasize that enough,” Scherl said. Double 18 has made six investments over the past five years, Scherl added, and they hope to tack on another 10 in the five years.
Saul Richter, managing partner at the Philadelphia-based Rittenhouse Ventures, also hopes to expand his footprint in New Jersey to finance B2B software.
“Software can grow on very little capital,” Richter said.