An early-stage venture fund, targeted at $50 million, and a new accelerator are coming to Newark to create a substantial technology industry.
Newark Venture Partners and its sister entity, Newark Venture Accelerator, expect to start accepting startups in October; the fund’s founder is Don Katz, who also is founder and chief executive of Audible.com, an Amazon.com subsidiary that moved its headquarters to Newark in 2007 and employs more than 700 people there.
Audible.com and Prudential Financial, another Newark company, are anchor limited partners in Newark Venture Partners; about half of the fund has been committed, Mr. Katz said, and the fund isn’t taking any government money.
Newark Venture Accelerator will accept 10 to 50 startups a year. It will work out of a rent-free office space from Rutgers University Business School, receive investments of $50,000 to $100,000, and mentoring from Audible and other corporate executives.
The managing director of both the fund and the accelerator is Thomas Wisniewski, managing director at family office RosePaul Ventures and director on the board of New York Angels.
If successful, the fund and accelerator would be a boost for New Jersey, which has had just a fraction of the venture capital investment of New York.
Startups in New Jersey attracted $419 million of venture capital in 2014, according to Dow Jones VentureSource, less than a tenth of New York’s $4.8 billion. The states have been on opposite trajectories; in 2005, for example, venture investors put $887 million into New Jersey startups and $1.1 billion into New York ones, according to data compiled by National Science Foundation.
New Jersey can attract more venture capital investment, Mr. Katz said. Newark has some of the fastest fiber-optic Internet availability in the country, several college campuses, a commute of less than 25 minutes to New York City and an international airport.
Supporters should have patience because growing a technology-focused state doesn’t happen overnight. “It takes many years for any place” to create any meaningful change in a startup ecosystem, said Dane Stangler, vice president of research and policy at the Ewing Marion Kauffman Foundation, where he has written several reports on the subject.
New Jersey has been at the “bottom of the table” for entrepreneurship friendliness, Mr. Stangler said, in part because it is dominated by large corporations and has “strong enforcement of noncompete agreements.” Startups often are launched by those who see a problem in an industry they have worked with, he said, and if they are prevented from working within the same industry after quitting, they are less likely to launch startups.
That is why policy that supports entrepreneurship is crucial, he said. According to Kauffman research, accelerators that put a time limit on participation by each startup, don’t take public money and offer plentiful opportunities for networking offer a greater likelihood of success for an economic development venture like Newark Venture Partners and Newark Venture Accelerator.