FUNDERS & INVESTORS
Understanding that early-stage companies have particularly unique challenges when it comes to securing capital, the New Jersey Economic Development Authority (NJEDA) offers a suite of resources to support them throughout their lifecycle. As the State’s principal agency for driving economic growth, the Authority plays a pivotal role in ensuring that innovation-focused companies have the financial tools they need to succeed.
Two of the NJEDA’s most popular resources for emerging innovation focused companies are the state’s Net Operating Loss (NOL) and Angel Investor Tax Credit programs.
Heralded as a lifeline for companies that have not yet reached profitability due to heavy investment in product and market development, New Jersey’s Technology Business Tax Certificate Transfer Program more commonly known as the NOL Program enables eligible technology and life-sciences companies to sell net operating losses in New Jersey and unused research and development (R&D) tax credits to unrelated profitable corporations for cash. The cash can then be used for working capital or to fund research.
Since the late 1990s, the NJEDA has approved more than $1.2 billion in funding for over 575 technology and life sciences companies through this program.
New Jersey’s Angel Investor Tax Credit Program offers investors a 20 percent refundable tax credit against qualified investments for New Jersey businesses. The program supports technology companies with a physical presence in New Jersey that conduct research, manufacturing, or technology commercialization in the state. Seen as a means to both invest in emerging companies and attract capital into the state, this program is open to investors worldwide. Investments in a business located in an Opportunity Zone or New Markets eligible census tract, or a business that is certified as minority- or women-owned by the State are eligible for a five-percent bonus. Over $800 million in investments have been leveraged to receive tax credit awards through the program since it began in 2013.
“Participating in a program that will connect us with cash in a nondilutive manner will have a positive impact on our company. As a serial entrepreneur, I know that the most successful businesses use every available resource to grow and scale. We are grateful to the NJEDA, and the State of New Jersey as a whole, for their commitment to emerging companies like ours.” – Citius Pharmaceuticals Co-Founder, CEO and Chairman Leonard Mazur.
In line with Governor Phil Murphy’s commitment to building the most diverse and inclusive innovation ecosystem in the nation, the programs and initiatives the NJEDA has developed since 2018 all place diversity, equity, and inclusion at the forefront and are designed to help minority and female-led companies in a variety of sectors flourish.
Together with First Lady Tammy Murphy, the NJEDA started the New Jersey Chapter of Golden Seeds in 2020 to connect female founders with seasoned investors. Golden Seeds is a nation-wide angel investor network dedicated to investing in female-led startups. Through a partnership with Golden Seeds, the NJEDA is creating the opportunity to increase available capital for women-led businesses as well as mentoring entrepreneurs to support and grow New Jersey women-led businesses.
Another funding source opening in 2023 is the New Jersey Innovation Evergreen Fund (NJIEF), a ground-breaking tool designed to grow the state’s innovation economy. Under the NJIEF, the State will become an equity investor in startups deploying up to $600 million into companies alongside professional venture capital groups. The Fund will also create mentoring, networking, and educational opportunities to help position New Jersey companies for success.
One of the NJEDA’s newest offerings – the New Jersey Innovation Fellows program – provides mentorship and grants of up to $400,000 to teams of first-time entrepreneurs. Through the program, the NJEDA will support teams of at least three entrepreneurs with mentorship, training, and income replacement capital. The grants are designed to replace a stream of income an entrepreneur might forgo to launch an early- stage business. The NJEDA anticipates that support from the NJIF Program will attract innovative ideas and entrepreneurs who would otherwise be unable to pursue the launch of a new venture due to the needs for income or, in the case of a recent graduate, who would choose to accept employment in lieu of entrepreneurship due to socioeconomic constraints.