In a major step to bolster the rising entrepreneurial tech ecosystem in Newark, New Jersey Governor Murphy announced today that Princeton-based venture capital firm SOSV will partner to bring SOSV’s acclaimed HAX hard tech startup development program to Newark.
The HAX program brings a wealth of resources to the Newark area in support of emerging companies and the surrounding ecosystem. The program includes a $250,000 initial investment in each participating company, 180 days of hands-on collaboration, and a global founder community for early stage founders building hard tech startups. The program will be led by HAX Partner Garrett Winther and SOSV General Partner Duncan Turner.
The HAX program establishes Newark as its U.S. headquarters. That announcement by Governor Murphy continues a stream of initiatives taken by his administration to make New Jersey an innovation and entrepreneurship focused state.
This past June the Governor announced that the NJEDA had signed an MOU with New Jersey City University (NJCU) to help create a Sports Wagering and Financial Technology Workforce Development and Innovation Center in Jersey City. About that same time a MOU was signed that enables the NJEDA to fund staff and resources at Stockton University for its esports initiative that includes Stockton establishing an Esports Innovation Center at the university’s Atlantic City campus.
In addition, the Governor spearheaded the establishing of incentives that bring both tech startups and investors to New Jersey. This includes: a matching investment program, angel/seed investor refundable tax credits, a Net Operating Loss Program for tech and life sciences companies that sell their New Jersey net operating losses and/or research and development (R&D) tax credits for cash, and recently the NJ Accelerate that encourages the participation of New Jersey Entrepreneurs via a high-quality accelerator program that matches investments up to $250,000.
The Governor also recently signed legislation establishing a ground-breaking funding tool called the NJ Innovation Evergreen Fund, which will allow venture fund managers, such as SOSV, to apply for up to $5 million per deal in matching government funds for investments in New Jersey-based companies. Seeking to support women or minority-owned companies and those located in disadvantaged communities, the deal amount increases to $6.25 million.
The new SOSV/NJEDA entity, combining science and engineering, will focus on industry-level innovation in areas related to the re-industrialization and de-carbonization of the U.S. Now pending approval from the NJEDA board is an investment of $25 million in HAX LLC that follows the non-binding letter of intent just signed between the two parties.
That investment supports SOSV’s goal and commitment to take 100 companies through the HAX program over the next five years, providing $25 million in venture capital funding to the startups. Follow-on financing from SOSV may reach $50 million, timely raising capital to support the growth of the startups and early stage companies. It is anticipated that the HAX program will create a minimum of 2,500 new, high-paying jobs over the coming decade and attract millions in new capital to the area in search of investment opportunities.
“One of my administration’s key strategies for building a stronger, fairer New Jersey is growing the most diverse, inclusive innovation ecosystem in the nation,” said Governor Phil Murphy. “Bringing HAX and the 2,500 jobs that come with this effort to Newark will help us achieve this goal while ensuring SOSV has access to the city’s extraordinary talent pool, 21st century infrastructure, and world-class network of higher education institutions.”
By locating the HAX headquarters in Newark, SOSV brings enormous investment depth to the state. In the venture capital industry SOSV is the #1 Most Active VC globally in Angel and Seed stages and was the #3 most active VC globally in Q2 2021. HAX in aggregate has collectively raised a total of $1.8 billion, primarily from angel investors and venture capitalists, of which $105 million was invested by SOSV. The current aggregate valuation of all HAX companies is $8 billion.
The new HAX entity will be a one of a kind, best-in-class startup development program focused on the re-industrialization of the US economy and renewing the US industrial base. This builds on SOSV’s track record of investing in over 100 manufacturing and industrial startups reflected in their portfolio companies that includes Formlabs, a 3D printing startup recently valued at over $2 billion dollars and Opentrons, the lab equipment startup operating New York City’s automated COVID-19 testing.
“HAX is a game-changer for the New Jersey innovation economy, and having the U.S. headquarters for the program in Newark is not only an incredible vote of confidence in Governor Murphy’s focus on building the most diverse and inclusive innovation ecosystem in America, but it will also help to create the equitable access to resources we need to continue supercharging our economy,” said NJEDA Chief Executive Officer Tim Sullivan.
SOSV’s presence in Newark will include mentoring at colleges and universities, local manufacturing sourcing, engagement in workforce development, and creating local advisory boards. In addition to the initial investment of $250,000, startups will have access to SOSV’s industry-leading technical assistance and facilities. They also gain access to an extensive network of SOSV investor contacts at seed, and Series A, and beyond—critical for obtaining follow-on investment from other VCs that historically is on the order of ten times what SOSV invests.
HAX’s center of operations in Newark will serve a new network of programs across the country, starting up in spring 2022. HAX plans to lease up to 60,000 square feet of space in the city for 200 founders and staff as well as fabrication and prototyping workshops.
SOSV Founder and Managing Partner Sean O’Sullivan views the launching of the HAX program in New Jersey as continuing the state’s long history of innovation, while also leveraging the city’s proximity to major transportation, having access to world-class colleges and universities for talent and using its high-quality internet infrastructure. Also, the tri-state region is the number two ranked global venture capital ecosystem.
“From the electric light bulb to the telecommunications and pharmaceutical industries, New Jersey has a long history as the birthplace of industries. Governor Murphy’s vision for innovation and commercialization works hand in glove with HAX’s strategy of igniting an industrial renaissance for the United States. And society as a whole has an urgent need for next generation hard tech companies to solve our current challenges in human and planetary health.”
Under the leadership of Mayor Ras Baraka, Newark has made significant strides to emerge as a top tech hub and center for entrepreneurship. HAX joins Audible, Inc., now owned by Amazon that has been a long time cornerstone of tech in the city. Audible’s founder Don Katz launched venture capital firm Newark Venture Partners that has brought a stream of angel invested and venture capital funded startups to Newark.
“Moving to Newark and creating Newark Venture Partners are among the best decisions Audible has made, and we’re thrilled that HAX will invest in local talent at all economic levels and help unleash tech to reclaim Newark’s status as a seedbed of innovation,” said Katz.
Mayor Baraka echoes Katz’s enthusiasm for HAX locating to Newark that will bring resources and jobs to the community.
“We are excited about the arrival of the HAX hard tech startup program in Newark and we look forward to working with HAX and the SOSV/NJEDA partnership to accelerate Newark’s growth as a technology hub. One of the major initiatives in our recently announced 2-year Equitable Economic Recovery Plan is a partnership with the Newark Alliance to support startups in Newark’s fast-growing tech sector, so this fits well with our economic development strategy and will provide more opportunities for our residents.”
Learn about Inaugural SOSV Climate Tech 100 Shows VC Firm’s Extensive Efforts to Counter Climate Change
