Writer: Joshua Andino
2 min read September 2022 — The recent HAX headquarters announcement demonstrates how New Jersey’s economic engine continues to hum.
Last week. Tim Sullivan, president and CEO of the New Jersey Economic Development Authority (NJEDA), touted the state’s recovery and economic strength in the wake of the new headquarters announcement by hard-tech startup program HAX, reports NJBIZ.
In the last two years, New Jersey has seen its credit-rating upgraded, companies such as SOSV’s HAX set up shop and new residents moved in. It’s been a concerted effort to revitalize the state’s economy and bring it to the forefront of the innovation economy, with Sullivan telling Invest:, “One of Gov. Murphy’s central priorities has been recapturing New Jersey’s leadership position in innovation and entrepreneurship. New Jersey has a great heritage of innovation, and if you look at models of substantial and durable job creation it comes from young companies growing and scaling into big companies. There are a number of tools, including our Evergreen Fund, that are focused on that.”
The Innovation Evergreen Fund was approved earlier this year, positioning the state as an equity investor alongside venture capitalist groups to provide a steady source of funding and expertise for companies looking to grow in the region. The fund, as well as the numerous incentive programs that Gov. Murphy has helped to develop, played a key role in bringing HAX to Newark.
“New Jersey stood out because it was willing to commit $25 million to build out the new HAX presence in the state,” said Garret Winther, partner at HAX, in a statement. “For its part, SOSV committed to invest at least $25 million in 100 HAX startups over the next five years. New Jersey also has remarkable incentives for startups, such as 1:1 matching investments, angel/seed investor refundable tax credits and the NJ Innovation Evergreen Fund, which matches investments up to $5 million in New Jersey-based companies.”
New Jersey’s business ecosystem, with its strong university system, prime location and heritage of business in a variety of industries including manufacturing, life sciences and financial services continues to drive the whole state forward. Those same characteristics, beyond New Jersey’s willingness to act as a partner for the organization, were deciding factors in selecting Newark. “Many of the country’s top research universities and technology-driven corporations are not far away, replete with researchers and scientists who might be entrepreneurs one day,” reads Winther’s release.
Those same researchers come from schools such as Princeton and Rutgers University, both of which find themselves in top spots when it comes to rankings. The venture capitalist and investor ecosystem the state has fostered has seen it rise to the ninth spot in the nation, up from its rank at 17 just a few short years ago. Finally, city and municipal governments themselves are active partners in the development of the state’s economy, with the first phase of the $665 million New Jersey Innovation and Technology Hub in New Brunswick approved in July. The project brings together Rutgers, Princeton University, RWJBarnabas Health, Hackensack Meridian and NJEDA and will further cement Middlesex County as a life science and innovation powerhouse, just down the road (or a train ride away) from HAX’s new 40,000-square-foot facility in Downtown Newark.
Despite the economic momentum the state has managed to develop, there are potential headwinds, warns Tom Bracken, president of the New Jersey Chamber of Commerce. While the economic growth the state has cultivated continues to yield results, the state will be disproportionately impacted by the Inflation Reduction Act (IRA) thanks in large part to its deep bench of multi-billion dollar companies. “There are not many billion-dollar companies in the U.S. that are affected by this 15% minimum tax, but a large contingent of them are headquartered here in New Jersey,” argued Bracken in an op-ed for NJBiz.
Healthcare, one of New Jersey’s “bread and butter” sectors, will also be adversely impacted, with Bracken stating that job cuts and diminished research spending are the likely outcomes of the IRA allowing the federal government to negotiate drug prices. “The Inflation Reduction Act allows the federal government to dictate prices on certain medications, which experts in the pharmaceutical industry predict will create significant disincentives for innovation and future research and development,” said Bracken. “The drug price-setting provisions will reduce revenue for drug makers and reduce by 20% the important drug research and development that is the foundation for breakthrough treatments.”
Yet it will still remain some time before the full impact of the IRA is felt, with its drug negotiation policies coming into effect later on in 2025. In the meantime, New Jersey will continue to grow, driven by a number of factors, including HAX’s own work in the area with about 25% of the company’s portfolio dedicated to supporting healthcare startups and disruptors. By then, the Hub will also likely be complete, providing further heft to an already robust economic engine.
For more information, visit: