Writer: Joshua Andino
2 min read September 2022— The New Jersey Economic Development Authority approved investing up to $1 million into Innovate Capital Growth Fund, a step forward for the state’s minority- and women-owned business community.
The Innovate Capital Growth Fund (ICGF) was created last year to provide growth capital, usually in the form of equity, to minority- and women-owned businesses (MWBEs). The Delaware limited partnership will be managed by Innovate Capital Growth GP, LLC, and is partly owned by The Enterprise Center (TEC), a nationally recognized community economic development center based in Philadelphia that is focused on growing MWBEs. TEC runs three federally contracted business centers, including the Camden Cares Business Center, which manages about 10% of TEC’s investment and operations professionals.
“We’re thinking about how we can support more minority and women-owned businesses, small and mom-and-pop Main Street businesses as well as innovation economy businesses,” said NJEDA CEO Tim Sullivan in an interview with Invest:. “We want to be the most diverse and inclusive innovation ecosystem in America.”
Through NJEDA’s limited partnership investment, each dollar NJEDA invests will see the ICGF invest $2 in New Jersey businesses. The result will total $3 million dollars of investment into New Jersey.
“If you look at stats from around the country, a little less than 2% or 3% of all venture capital invested in America goes to companies founded by people of color. Cross-multiply that by women of color and it’s 0.7%, said Sullivan. “Gov. Murphy is trying to do something about that.”
The ICGF is one part of a multipronged effort to bring about that reality, and in addition to the Camden Cares Business Center, TEC also manages a Community Development Financial Institution (CDFI). In all, TEC has helped to generate over $1 billion in contracts to small businesses and over $7 million in loans that has generated over 3,000 jobs across local communities.
“ICGF’s investment strategy aligns perfectly with Gov. Phil Murphy’s vision to create the most diverse and inclusive innovation ecosystem in the nation,” said Sullivan in a statement. “Through investments such as this one, we are providing much-needed capital for young companies to leverage as they grow, commercialize, and create good-paying jobs in New Jersey.”
Access to capital is often cited as the key roadblock to growing MWBEs, with advocates often making the case that expanding access and opportunity to MWBEs are key to equitable economic growth, with the state’s original 2018 economic plan noting that “Fairness is not a tradeoff for economic growth. In fact, research suggests that the intentional, equitable inclusion of all residents is critical to economic prosperity. The increased inclusion of women and racial minorities in the U.S. economy has accounted for more than 25% of the productivity growth that the U.S. has experienced over the past 50 years.”
John Harmon, president of the African American Chamber of New Jersey, notes that while the state has made positive strides, more remains to be done. “The services that we provided to small businesses through the support of the NJ Economic Development Authority (NJEDA) and the NJ Department of Community Affairs (NJDCA) has been extremely impactful.” said Harmon in an interview with Invest:. “We plan to continue to aggressively pursue our goals of putting more Blacks on corporate boards and in the public and private supply chains, increase their career opportunities and demand accountability… Public leaders need to be accountable as well in terms of improving economic conditions in their community.”
Fortunately, and beyond NJEDA’s own investment in the ICGF, the Fund was also awarded a small business investment company (SBIC) license from the United States Small Business Administration, allowing it to access private lenders and banks that may wish to invest in the same companies that the ICGF targets.
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