New Jersey Wants to Stake a Claim in the Innovation Economy

New Jersey Governor Phil Murphy rarely misses an opportunity to point out the Garden State once was a hub for innovation — where Thomas Edison invented the phonograph and the incandescent light-bulb, and the birthplace of the transistor that paved the way for modern computers.

“This is a state that was a Silicon Valley before there was a Silicon Valley,” Murphy told a crowd of entrepreneurs at Propelify, a tech festival on the Hoboken Pier in May.

But now, New Jersey lags behind. A 2017 study by consulting firm McKinsey found the state “has only 15 incubators and business accelerators, compared with 375 in California and 179 in New York.” The report also found there aren’t as many young companies in the state, in part because of burdensome regulations, a high cost of doing business and public policy that hasn’t been friendly to startups.

Propelify is in its third year, and it was the first time a New Jersey governor took the stage. Festival founder Aaron Price said the tech community finally has a friend in Trenton, after being largely ignored by the Christie administration.

“He wouldn’t engage with us,” Price, who also served Murphy's technology and innovation transition team, said. “It’s frustrating when you see an opportunity and someone who may help move the needle, and you can’t get that person to be responsive.”

Price said he’d like New Jersey to take bold steps to catch up for lost time.

“I would love to see us be the most drone-friendly state in the country,” he said. “I think with all the warehousing space, we could do something to attract and incentivize e-commerce.”

During the Christie years, much of the strategy for growing the state’s sluggish economy consisted of tax incentives to big, multi-state corporations — more than $7 billion in tax subsidies since 2013. Tom Bracken, president of New Jersey’s Chamber of Commerce, said there was no other choice.

“Every state in the country has economic incentive programs, and if we hadn’t enhanced ours, we would have been very noncompetitive,” Bracken told WNYC earlier this year.

But critics, like Sheila Reynertson of New Jersey Policy Perspective, say there hasn’t been much to show for it.

“These subsidies programs have not delivered,” Reynertson said.  “If they don’t there’s absolutely no penalty.”

Reynertson said that’s especially true for companies who were given tens of millions just to move a few miles within state. Like Panasonic, which got more than $100 million to move from Secaucus to Newark. She said the focus and the funds should go to small businesses, especially startups that have a chance to grow.

"That’s where you get your real kick in the economy. Supporting small businesses and people who are bringing new, fresh ideas to New Jersey,” she said.

Some of those fresh ideas can be found inside Newark Venture Partners, a fledgling venture capital firm on the seventh floor of Rutgers Business School in Newark. Tom Wisniewski, managing director of NVP, said the idea for the firm came from Audible CEO Don Katz.

In two years, NVP has invested and helped develop dozens of small tech companies that make products for other businesses, like HR software or healthcare tablets for hospitals. Wisniewski said that for every tech job, about five more are added in the professional and service fields.

“I help dry cleaners, I help restaurants, I help create an ecosystem,” he said.

NVP partners with business giants like Panasonic, Prudential and TD Bank. And the firm’s 25,000 square foot office is free, courtesy of the Rutgers Business School. It’s the kind of public-private-corporate-startup partnership that Murphy has said he wants at the core of his economic policies.

The Murphy administration is starting roll out programs that hope to boost entrepreneurship and bring the innovation economy back to the Garden State. On Tuesday, the governor announced a pilot offering some communities up to $100,000 to step up local innovation in science, technology, real estate and the environment.

There is one corporate tax subsidy that Murphy does support. New Jersey has offered Amazon $5 billion worth of tax breaks to build its second headquarters in Newark. Murphy told the crowd at Propelify that if Amazon brings 50,000 jobs to Newark, it would be a game-changer for the state’s largest city and the entire state.

“But I’ll tell you this, I wish they were born here. Because it’d be a lot cheaper,” Murphy said.