Economic development often is reduced to two key words: Job creation. Jobs are the engine of an economy and research has shown that early stage companies are the net job creators in the US economy. The New Jersey Economic Development Authority (EDA) is a quasi- state agency that provides a range of resources to benefit the state’s economy that includes helping NJ-based startups and small businesses grow to become the job creators that New Jersey needs.
As a result of the changing landscape of the business world and entrepreneurial ecosystem, the EDA has created programs suited for specific needs:
The Grow NJ program focuses specifically on the creation of jobs in the state, but also acts as a retention incentive program to ward off competition from other states offering tax incentive programs. To date, Grow NJ has generated $665 million in tax credits to aid the growth of tech companies.
The Technology Business Tax Certificate Transfer (NOL) Program is another way that the EDA provides assistance to startup tech and life sciences companies. Companies, typically in their early years, accrue net operating losses (NOL). To fund their operations, they can sell a portion of the NOL to large, profitable, unaffiliated companies who value the tax credits associated with the losses. The program has successfully yielded a total of $860 million that was distributed to 500 companies.
To provide sources of funding for emerging tech companies, the EDA created the Angel Investor Tax Credit Program in 2013. This program allows for angel investors from all over the US and the world, to invest in small NJ-based companies with fewer than 225 full-time employees. Through this program, angel investors have the opportunity to receive 10% tax credit or refund through the program. The investors do not need to be NJ residents but they do need to file taxes in the NJ. By the end of 2015, more than $125 million has been invested in NJ-based technology and life sciences companies through this program.
The EDA also offers the Edison Innovation Fund which was created to help support technology and life sciences companies that have garnered capital through angel and venture investors. This fund provides direct finance to these companies, so that they may be able to hire staff, market products and sales.
Founders and Funders is an upcoming EDA event on October 26, 2016 in North Brunswick, NJ. The event serves as a way for up-and-coming technology and life sciences companies to network with angel investors and venture capitalists. During this event, select entrepreneurs will have a 10-minute session with investors to pitch their venture and jumpstart a relationship. Founders and Funders continues the EDA’s mission to support small business growth and develop a better entrepreneurial ecosystem.
