-- Venture Capital Firms
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Venture capitalists typically fund emerging firms with the potential for significant growth in the anticipation that their investment at an early stage later will be rewarded with higher returns than other investment options. Venture capital is viewed as vital to support innovative entrepreneurs and ideas that drive job creation and economic growth. Apart from investment, venture capitalists also take an active role in the evolution of firms, often taking positions on boards of directors or otherwise providing advice on strategic and management issues facing newer companies.
In 2018, the venture capital industry committed $130.9 billion in US-based startups, surpassing the all-time high in 2000, according to the National Venture Capital Association. While New Jersey was among the top five states for venture capital investment a decade ago and was seventh as recently as 2015, its rank fell to 15th in the most recent report.
To address this decline, Governor Murphy in October 2018 proposed establishment of a fund that would allow the state to partner with private venture capitalists to invest in start-up companies that agree to locate in New Jersey. The proposal calls for raising $500 million over five years to create the New Jersey Innovation Evergreen Fund with $250 million generated through an auction of tax credits to New Jersey corporations and the other half from matching funds from private venture capital firms.
The New Jersey state government has taken other steps to encourage venture capital investment in the state, primarily through the New Jersey Economic Development Authority, the principal agency providing financing assistance to the private sector. The NJEDA sponsors a variety of programs to match venture capital investment in firms within the state, along with guarantees and loans available to growth companies pledging to create jobs. The Authority also encourages networking to promote contacts among investors and entrepreneurs, such as its support of the creation in 1996 of the New Jersey Tech Council (formerly New Jersey Technology Council), a group of investors, entrepreneurs, and others interested in venture investment. In 2000, the Tech Council initiated the establishment of an affiliated investment fund, originally the NJTC Venture Fund and renamed in 2016 as Tech Council Ventures. The tax credits offered through the EDA became a point of sharp conflict in 2019 when Governor Murphy created a task force which reported that large credits were provided to firms with ties to South Jersey Democratic power-broker George Norcross.
Additional sources of investment may be provided by wealthy individuals, typically called "angels," who may act on their own or join with other individuals or investment firms. In some cases, these individuals come together to hear pitches on potential deals, offer advice to entrepreneurs or discuss other investment-related topics. The JumpStart New Jersey Angel Network, for example, was formed in 2002 with the support of the New Jersey Technology Council and the New Jersey Economic Development Authority to help early-stage companies, with about half of its $35 million in investment in New Jersey firms.
Entrepreneurs and investors also may network through meetings of state and local chambers of commerce or through regional or local programs sponsored by banks, law and accounting firms interested in fostering contacts with growth companies and financiers.
* See also Financial Associations
-- Venture capital firm profiles
The following are profiles of selected venture capital firms and related organizations with interests in investment in growth companies in the state. Please contact us with corrections or comments.
- Domain Associates (Princeton)
Investments primarily in life sciences firms with outstanding growth potential, prefers to be in first institutional financing round, but will also invest at later stages, including in public companies. Interests include technologies which improve care and control costs in therapeutics and medical devices; clinical diagnostics that positively impact both quality of care and costs; tools and instrumentations; and healthcare information technologies. Since founding in 1985, involved in the formation of more than 260 portfolio companies, raised over $2.7 billion in capital. Pioneered model of licensing smaller products from big pharma and growing them into meaningful revenue generators via specialist-focused sales forces, also in licensing US products to Japanese firms. Investments include Esperion Therapeutics (lipid management focused on developing and commercializing complementary oral therapies for treatment of elevated low density lipoprotein cholesterol); Marinus Pharmaceuticals (biopharmaceutical development of innovative therapeutics to treat epilepsy and neuropsychiatric disorders); Bionano Genomics (optical genome mapping to reveal true genome structure in shorter and less expensive process than traditional mapping).
- Edelson Technology Partners (Montvale)
Manages $150 million fund, including corporate, not pension money, of ten multinational corporations in a series of strategic venture capital funds. Corporate partners include 3M, Asea Brown Boveri, AT&T, Cincinnati Bell, Colgate-Palmolive, Ford Motor, Reed Elsevier, UPS and Viacom. Invests mostly in US, but also in Europe, Asia, and Canada. Participates in start-ups, later round and mezzanine financings, initial investments typically range $1 million to $3 million, usually convertible preferred stock, but may also be convertible debt or common stock in privately held firms or in emerging public companies through private placements. Selected investments include Blackboard Software (online education and academic markets and servicers, including publishers, test prep companies); EXA (simulation-driven software in computer aided design for product engineering, particularly motor vehicle manufacturers); Catalina Marketing (maintains world’s largest database of shopper purchase history, assists brands and retailers with in-store and digital marketing, advertising, coupons); Celgene (headquarters in Summit, biopharmaceutical research and development of drugs and treatments for incurable hematological and solid tumor cancers, including multiple myeloma, myelodysplastic syndromes, chronic lymphocytic leukemia, non-Hodgkin’s lymphoma, triple-negative breast cancer and pancreatic cancer).
- Edison Partners (Lawrenceville)
Focus on investment and management development for businesses ranging from $5 to $20 million in revenue in financial, healthcare, enterprise and marketing technology. Investment objectives include buyouts, recapitalizations, spinouts and secondary stock purchases. Active portfolio created aggregate market value exceeding $10 billion, manages more than $1 billion in assets throughout eastern US. National leaders in financial services technology. Selected investments include Axial (largest online capital marketplace connecting private companies to capital for M&A and growth financing); ComplySci (global leader in providing web-based regulatory compliance technology and services for financial services industry); Virtual Health (first true population health management platform for hospitals and other providers with single ecosystem to proactively manage complex populations); Terminus (leading account-based marketing platform allowing B2B marketers to target accounts, engage decision-makers, and accelerate marketing and sales pipeline velocity at scale); Zagster (planning and management of bike-share programs); MoneyLion (online personal finance platform for loans and other consumer credit products).
- Foundation Venture Capital Group (New Brunswick)
Offers seed and early stage funding in life science companies such as biotechnology, medical devices and research. Founded 2006 with$5 million grant from parent New Jersey Health Foundation to invest in life science start-ups with the potential to move research or products to commercialization, later received additional $5 million allocated for investment. Investments up to $500,000 each. New Jersey Health Foundation also sponsors other programs to support research in New Jersey with grants up to $35,000 each for research projects and healthcare-related education programs. Investments include Visikol (North Brunswick, Rutgers-related firm marketing bio‐imaging technology chemical formula allowing researchers to effectively visualize biological tissues in 3‐D); Actinobac Biomed (Kendall Park, developing new therapeutic protein agent, Leukothera® as treatment for white blood cell related illnesses such as leukemia, myeloma, lymphoma, autoimmune/inflammatory diseases and latent infections); GeneAssess (New Brunswick, developing its discovery of the FRY gene as a more predictive biomarker for breast and other cancers, using targeted genomic sequencing to detect genetic mutations); NovoPedics (New Brunswick, co-founded by two surgeons and professors at Rutgers Robert Wood Johnson Medical School, developing implantable biodegradable polymer medical device for knee replacement surgery that restores mobility to patients suffering from severe meniscal knee injuries).
- JumpStart New Jersey Angel Network
Formed 2002 with active support of New Jersey Technology Council and New Jersey Economic Development Authority network to help early-stage companies. Investments have totaled over $35 million in 45 companies in Mid-Atlantic region, with more than half of investment in NJ. Invests primarily in early-stage technology companies from software as a service technology, apps to behavioral health modification to clean technology. Investments and syndications have included United Silicon Carbide (Monmouth Junction, semiconductor development to support more energy efficient products such as diodes and switches); VectraCor (Totowa, development of products utilizing its patented intellectual property to simplify and provide faster method for diagnosis, prevention, and treatment of cardiac and neurological diseases); Powerhouse Dynamics (tools to help identify and eliminate wasteful energy consumption in residential market and to deliver cloud-based enterprise energy and asset management solutions for large portfolios of small commercial facilities; Sword Diagnostics (life sciences company supporting research and pharmaceutical communities for earlier disease detection with technology to effectively measure and determine ultimate value of biological markers).
- New Jersey Economic Development Authority (Trenton)
State-created authority which provides range of financial programs, which include direct loans, bank participations and guarantees, and tax-exempt bonds. Also supports venture capital firms with up to $10 million or 10% of fund's size investing in early-stage technology and life science companies with revenues less than $3 million, Administers Angel Investor Tax Credit program of up to total $25 million per calendar year and three related Edison Innovation Fund programs providing up to $500,000 in subordinated convertible debt financing for matching investments by angel investors and smaller technology and life sciences companies.
- Omni Capital Group (Freehold)
Invests in early-growth stage technology, communications and information companies, also works with corporate partners to create new companies. Focuses on investments in Boston-Washington corridor, invests $2-8 million per company, with smaller amounts for early stage companies. Interests include media technology such as virtual reality; security management, monitoring and video surveillance; wireless devices and applications. Managing Partner Dr. Arun Netravali former President of Bell Laboratories, other partners include past executives, scientists with Lucent Technologies, AT&T. Investments include Catheter Precision (Ledgewood, medical device company which developed remote navigation system to aid in maneuvering and placement of catheters in complex cardiac catheterization procedures); Personalized Media (offers platform for brand publishers and media networks to engage users with interactive content, videos and apps on webpages, eliminates need for users to leave page or site); Flowonix Medical (Mt. Olive, delivery of medications for pain management by pump implanted under skin directly into fluid surrounding spinal cord, allowing lower doses of medication than if taken by mouth).
- Princeton University Intellectual Property Accelerator Fund (Princeton)
Awards gap funding to Princeton faculty and student investigators to foster development of technologies from university labs into commercial development, fills development gap between early stage research and investment- and venture-grade opportunities. Supports proof-of-concept work, data collection, and/or prototyping that can further development to make a technology more commercially attractive. Funded projects have included technology using sound waves to detect level of charge and health of batteries, detect potentially explosive conditions on lithium-ion cell batteries; laser-based diabetes management system that measures blood glucose levels through skin without requiring prick to draw blood; enhanced protection of security of implantable and wearable medical devices such as pacemakers, cochlear implants and drug delivery systems; wireless communications technology capable of canceling interference involving new type of computer chip that uses light rather than electrons; low-cost portable diagnostic sensor to detect proteins and genetic material linked to diseases that practitioners can use in the field; strategy to block Hepatitis C virus by targeting enzymes in liver that help virus replicate. Grants typically range $50,000-$100,000.
- Ridgewood Capital (Montvale)
Part of affiliated Ridgewood Companies founded 1982 which have raised over $7.5 billion in total capital and commitments primarily focused on direct equity investments in energy, infrastructure, and other real asset strategies. Units include Ridgewood Private Equity Partners investment firm focused on US infrastructure opportunities and Ridgewood Energy private equity firm focused on oil and gas exploration and development investments in Gulf of Mexico.
- SOSV (Princeton)
$300 million under management. Funded over 500 startups, currently annually funds over 150 startups, third most active seed investor in world. Accelerator programs focused on hardware and connected devices, synthetic biology, software and food business. Over 70 on staff, including on-staff industrial designers, mechanical engineers, mechatronics engineers, electrical engineers, design for manufacturing and assembly and supply chain experts. Founder and Managing Director Sean O’Sullivan a founder of MapInfo, street mapping technology for personal computers which became $200 million public company, also for another startup invented term “cloud computing.” Portfolio includes Harmonix (world’s leading music game developer); Leap Motion (interactive digital content in virtual and augmented reality using software and hardware tracking movement of hands and fingers converting into 3D input); Voltera (system to produce prototype computer circuit boards on office or home workbenches); Kindara (menstrual cycle charting for pregnancy planning); Particle (circuit board kits to develop Internet of Things products through cellular data network).
- SoundBoard Angel Fund (Morristown)
Over 30 investors investing in education, products, and technology. Portfolio includes Sobi Social Bicycles (develops, manages community, university, corporate campus bike-sharing programs); Veramarx (diagnostic test for early stage detection of Lyme Disease); PCB:NG (electronic product development from uploaded personal designs); LUXTECH (designs and develops LED modules for lighting fixture manufacturers); Fund That Flip (online lending for real estate renovations).
- Sycamore Ventures (Princeton, also New York, Cupertino, CA and Singapore)
Global investment firm with funds under management invested in US, greater China region, and India. Invested in more than 100 companies, taken over 20 companies public and sold or merged over 40 companies.
Invests in broad range of sectors including information technology, consumer, manufacturing, and media, typically with $5 million to $25 million in equity in Chinese and Indian firms. In US, invests in late stage information technology and bio-pharmaceutical companies with at least $5 million invested in each company. Partners included late John Whitman who died in 2015, husband of former NJ Governor Christine Todd Whitman. Investments include Osteotech headquartered in Eatontown, world's largest processor of aseptic allograft bone tissue for transplantation and innovator in musculoskeletal surgery.
- Tech Council Ventures (New Brunswick)
Founded in 2000 as NJTC Venture Fund by New Jersey Technology Council, renamed Tech Council Ventures in 2016. Capital from corporations, financial institutions, family offices, professional service providers, $80 million in early stage venture capital investments in greater New Jersey region. Industries include information technology, new media, and healthcare/life sciences. Invests $250,000 to $5 million, supports its portfolio with network of local, active partners and advisors. Investments include Andrew Technologies (Haddonfield, early stage medical device company working to develop novel surgical instruments using proprietary technology); CytoSorbents (Monmouth Junction, critical care immunotherapy medical device company marketing CytoSorb, a patented blood purification technology designed to treat potentially fatal sepsis in life-threatening illnesses and cardiac surgery).
-- Additional Resources
* FundingPost.com (web profiles of venture firms, angel investors and companies seeking investment and national and regional events and meetings)
* EquityNet.com (online crowdfunding with profiles of investors and companies seeking investment)
* National Venture Capital Association (leading national nonprofit venture organization, lobbies for federal policies supporting investment, publishes research and data on venture investments)
* Angel Capital Association (North American professional association of regional, state and local groups with 13,000 active investors)
* New Jersey Economic Development Authority (principal state government agency for financing assistance)
* New Jersey Tech Council (formerly New Jersey Technology Council, networking group of investors, entrepreneurs, and others interested in venture investment)
* New Jersey Tech Weekly (Web and newsletter on tech startups, financing, events)
* Meetup Groups (national network of groups meeting locally on subjects including finance, investing, technology etc.)
* NJBiz.com (NJ business web site and newspaper, publishes and sells lists of venture firms, growth companies)
* Inc.com (publishes annual lists of fastest-growing US companies)
* Economy * Employers * Growth Companies * Venture Capital
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