Tired of high taxes?
Yeah, I know, that’s not really a serious question. But a very serious question is how are we going to help to continue to pay for one of the finest public education systems in the country, pay the cost of a long-neglected public pension system for thousands of hard-working men and women that have always paid their share while New Jersey did not, and fund programs to help our most vulnerable neighbors, children, and seniors?
Should we look for places to reduce spending, ways to share essential services, reduce healthcare costs without reducing access to high quality healthcare? Of course we should. And should we make sure our tax structures are fair without adding to the burden of people struggling to make it? Absolutely.
But lost in the political battles that are dominating the headlines is a solution that will require long-term thinking, a strategic and focused approach that looks at New Jersey’s strengths and leverages those to create high-quality, high-paying jobs for people of all backgrounds and education levels.
It is critical for us to grow what is typically called our “Innovation Economy.”
That means it’s time for New Jersey to invest in the creative ideas that N.J.’s entrepreneurs have so that they have access to the resources they need to build successful N.J. startup companies that grow, that hire our talented workforce, and create new sources of revenue that are sustainable for years and decades to come.
To do so will take some political courage, but the gains to the people of New Jersey are enormous. No risk, no reward.
Other states are directly investing in their innovation economy and have rapidly passed us as leaders in middle-class job growth.
In 2007, New Jersey was fifth in the nation in total venture capital funding with over $1.3 billion invested. As of 2017, New Jersey dropped to the 14th spot, with approximately $748 million invested. By comparison, New York had approximately $11 billion invested in 2017.
New Jersey’s lack of venture capital funding means we do not have the tools we need to attract and support high-growth companies and top talent.
But we can reverse this trend. The Innovation Evergreen Fund proposed by Gov. Phil Murphy would help New Jersey regain some of that lost funding, while leading to innovations that could potentially change the world.
The goal with this type of investment is not to lure an established company and its hundreds of jobs away from a competitor state but rather to provide funding and support for startups to thrive and grow. Instead of looking to attract Facebook or Twitter or Salesforce, we’d be fostering an environment to grow the next tech success story.
Evergreen will pair the proceeds from the sale of future tax credits with private venture capital funds. The public funds will be raised over five years by auctioning off $60 million of tax credits annually to corporations registered to do business in New Jersey. Companies bidding on the tax credits would be evaluated on two criteria: The bid for the tax credit, and the company’s commitment and ability to support a State funded startup.
The state expects to raise roughly $50 million annually by auctioning the tax credits for a total of about $250 million over five years. That money will be matched at least dollar for dollar by private venture capital money. Once the initial capital is raised, profits would be reinvested in the fund, making it self-sustaining. Venture capitalists would be charged with picking the companies to invest in.
This program would provide critical capital to companies that could one day provide hundreds or, for the biggest success stories, thousands of jobs to our state.
If our state is going to reclaim its place atop the innovation economy it is time for some new ideas. The Innovation Evergreen Fund is just such an idea.
Andrew Zwicker is an assemblyman representing New Jersey’s 16th Legislative District.