CHRISTIE ADMINISTRATION STRENGTHENS SUPPORT FOR EMERGING TECHNOLOGY BUSINESSES
Enhanced Venture Capital Growth Fund Recognizes Value of Strategic Investors
TRENTON, N.J. (Jan. 15, 2013) – Emerging technology and life sciences companies that have attracted capital through strategic investments will now be eligible for assistance through the Edison Innovation Venture Capital Growth Fund. This enhancement further supports Governor Chris Christie’s commitment to technology-led entrepreneurial development by recognizing the value and increasing use of nontraditional investors in the marketplace.
Administered by the New Jersey Economic Development Authority (EDA), the program was created in 2011 to benefit early stage, emerging technology and life sciences companies by providing growth capital to directly fund uses such as hiring key staff, product marketing and sales. The program, which provides a subordinated convertible note of up to $1 million for eligible companies, previously included a 1:1 matching requirement only satisfied by venture capital funds. The program now allows strategic investments, which can be made by a variety of sources, including commercial or institutional entities, nonprofit organizations or universities, to also be eligible.
“The EDA’s goal is to ensure our programs are meeting the needs defined by the marketplace, and this enhancement supports the fact that strategic investors have become more and more attractive to emerging companies,” said EDA Chief Executive Officer Michele Brown. “The Christie Administration has placed a high importance on nurturing the growth of our technology and life sciences companies, and this program now recognizes the unique advantages strategic investors offer New Jersey’s early stage businesses.”
At the EDA’s Board meeting today, EDA President and Chief Operating Officer Tim Lizura outlined the benefits of nontraditional investors. This includes a more diverse investment strategy beyond solely financial return and a greater potential for follow-on funding. Lizura noted that strategic investors have increasingly become more attractive to emerging companies as they often bring industry expertise in addition to liquidity, access to a more robust customer base, validation to the technology or product and opportunities for operating partnerships. Assistance through the Edison Innovation Venture Capital Growth Fund was approved at today’s EDA Board Meeting. All Board actions will take effect at the expiration of the statutory period for the Governor’s review and consideration of the meeting minutes.
Consistent with the current process, due diligence interviews will be completed with strategic investors. This entails the collection of important information including the size of the fund, percentage of the total fund committed to date, potential for follow-on funding, and a background review of the company’s management. Strategic investors will be required to be unrelated, arms length investors, without any common ownership.
To be eligible for the program, New Jersey-based companies must have minimum trailing 12 month commercial revenues of $500,000, derived from core business activities, such as the sale of technology products. Companies also must be the developer or owner of protected proprietary technology.
For more information on the Edison Innovation Venture Capital Growth Fund, visit www.njeda.gov. To learn more about opportunities for business growth throughout New Jersey, visit the state’s business portal at www.NewJerseyBusiness.gov.