Gov. Phil Murphy, making good on promises to commit to growing New Jersey as an innovation economy, announced two new initiatives to help bolster high-tech companies’ interest in the Garden State.
The Incubator and Collaborative Workspace Rent Initiative and a new Research and Development tax credit will enhance the state’s ability to attract and nurture innovative companies, he said Wednesday.
“Both of these initiatives will allow us to take full advantage of all New Jersey has to offer entrepreneurs and startups as well as our established innovation-driven companies,” Murphy said. “We have everything right here at our fingertips to dominate the innovation economy — our people, our location and our history.
“We’ve led this sector before, and, through these additional tools, New Jersey will reclaim our national and international prominence for innovation and discovery.”
The revised R&D tax credit would be the first major change to criteria since 1992. More importantly, Murphy said, it is intended to diversify the recipients.
In the last fiscal year, 200 recipients concentrated in pharmaceutical, telecommunications and other advanced technology industries received credits totaling $80 million.
State Treasurer Elizabeth Muoio said diversity is key to growth.
“For many years, New Jersey was known as the ‘medicine chest’ of the world,” she said. “However, increasing competition, both domestically and abroad, has threatened that distinction and demanded we do more to spur economic growth.
“The modernized R&D tax credit established in this year’s budget will help us attract and retain innovators, spur long-term job growth and stimulate sustainable revenue while sending a message that New Jersey is committed to remaining a global leader in innovation.”
Murphy said the Incubator and Collaborative Workspace Rent Initiative will spark growth, too.
The New Jersey Economic Development Authority, with an initial investment of $500,000, will be tasked with assisting new startups with half the cost of short-term rent at incubators, accelerators and other collaborative workspaces, with a maximum of $15,000 per startup.
They can qualify for an extra month of support if the startup is recently established, in an Opportunity Zone census tract, or affiliated with a hospital system or New Jersey university — or three extra months if they qualify for all three.
The EDA already has incentives for qualified incubator facilities, which include 50,000 or more square feet of office, laboratory or industrial space located near a research institution, teaching hospital, college or university. This additional incentive targets the lessee rather than the lessor.
Tim Sullivan, the CEO of the EDA, said the moves will help jump-start innovation.
“The benefits of collaborative workspaces are clear for young startups, but capital constraints often serve as an obstacle, with entrepreneurs investing their limited resources to optimize research and product development efforts instead of paying rent,” he said.
In a statement Wednesday, the governor’s office cited National Business Incubation Association data to support the need for the new incentives.
New Jersey currently has 29 incubators, seven accelerators and 31 coworking facilities.
Those numbers are already poised to grow, and the new incentives are the right catalysts, according to Anne-Marie Maman, president of New Jersey Business Innovation Network.
“The innovation ecosystem of New Jersey is heating up,” she said, “and funding programs that give concrete support to young companies are the kindling.”