EDA IMPLEMENTS STRATEGY GUIDELINES TO GOVERN VENTURE CAPITAL, COMMUNITY DEVELOPMENT INVESTMENTS
TRENTON, N.J. (December 28, 2006) – The New Jersey Economic Development Authority (EDA) will implement guidelines to ensure that its venture capital and community development investments are aligned with Gov. Jon S. Corzine’s Economic Growth Strategy and consistently support the success of emerging technology companies, woman-owned and minority-owned enterprises and other small businesses, and real estate development projects in New Jersey.
“These guidelines set forth a strategy for reviewing and assessing qualifications for EDA venture capital and community development fund investments through the Edison Innovation Fund and the New Jersey Urban Fund,” said EDA Chief Executive Officer Caren S. Franzini. “They make it clear to the investment community exactly the kind of partnerships we are looking to build and how we are seeking to build them.”
Equity fund investments will focus on early-stage investment funds and include funds that invest in companies with less than $3 million in annual revenues, a traditional minimum threshold for equity investments.
Investments will be expected to earn a reasonable rate of return, which will be measured in financial terms and by job growth in targeted sectors. Funds in which the EDA plans to invest will need to demonstrate an ability to leverage the EDA’s investment with other investment dollars at a minimum ratio of 3:1.
Other guidelines stipulate that:
- Partners in investment funds have an established track record, although consideration may be given to a first-time fund;
- Any fund under consideration should be managed by a team that has both operating and financial experience. Technology/life sciences investments will require senior partners to have a personal investment in the fund;
- Fund management should be willing to serve as an EDA strategic partner; and
- There will be a strong preference for funds that have a physical presence in New Jersey and have a history of investing a minimum of one-third of their funds in New Jersey and maintaining its investment at least at that level.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey’s communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.