From the Star Ledger:
Is New Jersey’s government smart enough to invest $250 million in venture capital projects, and come out a winner? Should a government that is not competent to run the trains on time take that risk with taxpayer money?
The proposal comes from Gov. Phil Murphy, who described it as “the big idea” behind his new effort to revive New Jersey’s sputtering economy, which he unveiled Monday. It’s an aggressive use of government, which is no surprise coming from an audacious liberal like Murphy.
The surprise is that even conservative business groups like the Chamber of Commerce and the New Jersey Business and Industry Association welcomed the plan, pending a review of details.
“Maybe this is the time we can get something right,” says Michele Siekerka of the NJBIA. “Sometimes we have to try new things, go outside the box.”
The governor’s plan is sprawling, with initiatives in transportation, housing, and job training. But it’s the venture capital idea that crosses into new territory.
Tim Sullivan, the EDA’s executive director, says that the program is designed to rely on the expertise of private venture capital firms, who will have their own skin in the game. The state would supply half the money, matching an equal investment from private firms, for a total investment of $500 million over five years. “They are putting up their own money alongside of us,” Sullivan said.
Still, there is room for error. Start-ups are inherently high risk, and the state will still have to choose among competing proposals from private firms.
A second question: Murphy noted that venture capital investments in New Jersey dropped by half during the last decade, while they increased in states like New York and Massachusetts.
But doesn’t that suggest the core problem is New Jersey’s rotten business climate, rather than a shortage of venture capital? Why else would venture capitalists choose other states first?