Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

What Startups and VCs Need to Know About the New Jersey Innovation Evergreen Fund

Author: Scarinci Hollenbeck, LLC

Date: May 19, 2022

Key Contacts

Back
HALOS Act 2017

The New Jersey Economic Development Authority (NJEDA) recently proposed rules to establish the New Jersey Innovation Evergreen Fund.

The New Jersey Economic Development Authority (NJEDA) recently proposed rules to establish the New Jersey Innovation Evergreen Fund. The new fund will serve as a source of capital for the State to co-invest with venture capital investment firms in early-stage businesses based in New Jersey, with the goal of fostering innovation and attracting businesses to New Jersey.

“The New Jersey Innovation Evergreen Fund is a groundbreaking public-private partnership that will fuel our innovation economy by attracting entrepreneurs and venture capital to the state,” Governor Phil Murphy said in a press statement

How the New Jersey Innovation Evergreen Fund Works

The New Jersey Economic Recovery Act of 2020 authorizes the NJEDA to sell up to $300 million of corporate tax credits through the auction of up to $60 million of tax credits annually for the entirety of the seven-year program. In exchange for the tax credits, the New Jersey Innovation Evergreen Fund (Evergreen Fund) will receive capital from the tax credit purchasers along with strategic commitments to support early-stage businesses.

The NJEDA will return dividends and returns on investments to the Fund, making it self-sustaining or “evergreen.” Once the Fund has received total deposits from dividends and returns from qualified investments equaling $500 million, the NJEDA will pay 50 percent of any return on investment that exceeds two times the amount invested for that qualified investment to the State’s General Fund. The NJEDA will also utilize 75 basis points of the total funding amount in the Evergreen Fund to establish and administer additional programs that support the growth of innovation in the State.

Eligibility for New Jersey Innovation Evergreen Fund

To be eligible to purchase tax credits, a potential tax credit purchaser must meet criteria including, but not limited to:

  • Specify the requested amount of tax credits the potential tax credit purchaser proposes to purchase, which shall not be less than $500,000;
  • Specify the percentage amount the potential tax credit purchaser proposes to pay in exchange for the requested amount of tax credits, which shall not be less than 75 percent of the requested dollar amount of credits;
  • Specify and quantify the nature and cost of its strategic commitment, including but not limited to, mentorship hours, internship offerings, sales, and distribution pipeline access;
  • Commit to serve on the New Jersey Innovation Evergreen Advisory Board for one-year from the time of tax credit approval; and
  • Provide a refundable deposit for 10 percent of the tax credit purchase offer, not to exceed $500,000, at the time of application.

To receive an investment through the Evergreen Fund, a business must satisfy the following criteria:

  • Is registered to do business in New Jersey with the Director of the Division of Revenue and Enterprise Services in the Department of Treasury;
  • Has principal business operations in the State;
  • Is engaged in a targeted industry;
  • Employs fewer than 250 full-time employees; and
  • Meets the definition of a high-growth business.

The NJEDA will also establish an application process through which a venture firm may apply for certification as a qualified venture firm. Approval will enable the qualified venture firm to apply for funding from the Fund to make qualified investments in early-stage New Jersey businesses. To be eligible to become a qualified venture firm, a venture firm must meet various eligibility criteria, including but not limited to:

  • Not less than $10 million in any combination of one or more of the following: net assets of the funds managed by the qualified venture firm, equity capitalization of the funds managed by the qualified venture firm, or written commitments of cash or cash equivalents on the date the determination that the certification is made;
  • At least two principals or persons employed to direct the qualified investment capital, each of which shall have at least five years of significant angel investment experience or professional money management experience in the venture capital or private equity sectors; and
  • Additional weighted evaluation criteria, which may be amended by the Authority, including: the management structure of the applicant, the applicant’s investment strategy, the location of the venture firm, and the applicant’s proposed structure and policy of investments in qualified businesses.

What’s Next?

The NJEDA expects to launch the Evergreen Fund later this year. In the meantime, interested entities should review the proposed rules, eligibility requirements, auction application and review process, and other materials on the NJEDA website. We also strongly recommend working with experienced counsel who can walk you through the approval process.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Ashley Brinn or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]

Author: Matthew F. Mimnaugh

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
Gross Lease vs. Net Lease: Understanding the Key Differences post image

Gross Lease vs. Net Lease: Understanding the Key Differences

Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

Author: Robert L. Baker, Jr.

Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!