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NJEDA

NJEDA Board approves creation of New Jersey Innovation Evergreen Fund to cultivate entrepreneurship

The New Jersey Innovation Evergreen Fund will drive investment and cultivate entrepreneurship in the state. 

The New Jersey Economic Development Authority (NJEDA) Board  approved the creation of the New Jersey Innovation Evergreen Fund (NJIEF), a groundbreaking new tool to increase access to strategic resources and venture capital in New Jersey. The NJIEF will create partnerships between the state and the private sector to collaboratively align New Jersey’s well-resourced corporations, and national investors to support entrepreneurs and grow the innovation economy in the state.

Under the NJIEF, the State will become an equity investor in startups deploying up to $600 million into companies alongside professional venture capital groups. This strategic investment will not only support New Jersey’s entrepreneurs, but will also ensure that more companies start, grow, and stay in state. Established by the New Jersey Economic Recovery Act of 2020, the NJIEF is an innovative tool designed to incentivize investment in emerging New Jersey companies while creating mentoring, networking, and educational opportunities to help position these companies for success.

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,” said Governor Phil Murphy. “The NJIEF draws on the strengths of New Jersey’s world-class corporate leaders to create a steady stream of investment and expertise that will nurture the next generation of innovators. By fostering investments in entrepreneurship and start-up companies, we are driving job creation and economic growth for New Jersey.”

The concept for the NJIEF was first announced in October 2018 as part of Governor Murphy’s economic development strategic plan The State of Innovation: Building a Stronger and Fairer Economy in New Jersey.

“New Jersey has long served as fertile ground for inventions that changed our world – from Thomas Edison and the creation of the lightbulb to Beatrice Hicks and the development of a switch that helped land the Apollo spaceship on the moon,” said New Jersey State Senator Andrew Zwicker. “Our state has a long history of investing in entrepreneurs, and the NJIEF is a key component of reclaiming New Jersey’s leadership role in innovation by creating a vibrant culture of investment that is dedicated to growing the companies of the future.”

“When entrepreneurs think of leaders in innovation, New Jersey should be at the top of their list,” said NJEDA Chief Executive Officer Tim Sullivan. “The NJIEF will not only serve as a novel approach to investing in entrepreneurs, but also a key contributor for job creation and sustainable economic growth. Today’s announcement serves as a testament to Governor Murphy’s leadership in growing NJ’s innovation economy by investing in New Jersey companies and startups.”

“The NJIEF is a game-changing program that will catalyze venture capital investments into New Jersey startups,” said Kathleen Coviello, NJEDA’s Chief Economic Transformation Officer. “The state’s role as an equity investor will encourage established corporations to commit capital and knowledge-sharing resources, creating a dynamic cycle of innovation.”

The seed capital to launch the NJIEF will be raised by auctioning up to $300 million in transferrable tax credits — with an annual cap of $60 million during each of the first five years after program launch — to corporations registered to do business in New Jersey. Corporations seeking to purchase the tax credits must commit to supporting the state’s innovation economy through activities such as mentorship, internships, sales and distribution pipeline access, and availability to serve on the NJIEF Advisory Board for one year.

Auction bids will be evaluated according to price and the specific strategic commitments the bidding company makes to support NJIEF’s portfolio companies and the state’s broader innovation ecosystem, including networking and mentorship opportunities. Once the funding is raised, the NJEDA will partner with professional venture capital firms operating anywhere in the country to co-invest the funds in eligible high growth businesses in New Jersey.

Full details on the NJIEF are available at https://www.njeda.com/economicrecoveryact/. The NJEDA expects to launch the NJIEF later this year.

About the NJEDA

The New Jersey Economic Development Authority (NJEDA) serves as the State’s principal agency for driving economic growth. The NJEDA is committed to making New Jersey a national model for inclusive and sustainable economic development by focusing on key strategies to help build strong and dynamic communities, create good jobs for New Jersey residents, and provide pathways to a stronger and fairer economy. Through partnerships with a diverse range of stakeholders, the NJEDA creates and implements initiatives to enhance the economic vitality and quality of life in the State and strengthen New Jersey’s long-term economic competitiveness.

To learn more about state resources available to New Jersey entrepreneurs and early-stage companies, visit https://www.njeda.com and follow @NewJerseyEDA on FacebookTwitterInstagram, and LinkedIn.

funding genderization

Funding “genderization” makes Latinas, minority women-owned businesses, big losers in 2021 revenue and funding

The message is loud and clear for Latinas and other minority women-owned businesses. Despite the continuous big announcements from traditional to alternative funders that diversification of funding and access to capital for minority female founders is on the way, we have not moved an inch, not a centimeter! 

We are not getting it, and I’m tired of funding “genderization.”

Many can blame the pandemic or that women had to become caregivers of parents and children, and still try to save their businesses. They can argue they had to leave or close their businesses because of the lockdown and criticize government pandemic measures. They can also find excuses for operating raising costs or the supply chain disruptions but haven’t these been the same conditions for all small businesses operating during a challenging year? 

According to a Biz2Credit study that reviewed 100,000 credit inquiries, “women-owned business profits averaged $88,995, much less than 2020’s figure of $119,654, and $47,152 less than the average for male-owned firms ($136,147) in 2021.”

The study also found that “profits for female business-owners dropped 26% in 2021 from 2020, while average annual revenues dipped 4%.”

  • Average Annual Revenue dropped from $493,401 in 2020 to $475,707 in 2021.
  • Average Profits (annual revenue – operating expenses) of women-owned businesses fell to $88,995 in 2021 from $119,654 in 2020
  • Average Expenses increased from $373,748 in 2020 to $386,712 in 2021.
  • Average Credit Score for female business owners dropped from 588 in 2020 to 580 in 2021.
  • Top Industry: Services (except public administration) represented 31.9% of the women-owned companies in 2021.

Latinas and other minority women-owned businesses stall big time

Since the frenzy reported by American Express, The 2019 State of Women-Owned Business Report,, between 2014 and 2019, the number of women-owned businesses climbed 21% to nearly 13 million (12,943,400). Employment grew by 8% to 9.4 million. Revenue rose 21% to $1.9 trillion. 

women owned business

2014 – 2019 Growth Rates for Women-Owned Businesses VS. All Firms. (Source: The 2019 State of Women-Owned Business Report)

While the number of women-owned businesses grew 21% from 2014 to 2019:

  • Firms owned by women of color doubled that rate (43%). 
  • Numbers for African American/Black women grew even faster at 50%. 
  • Native Hawaiian/Pacific Islander (41%), 
  • Latina/Hispanic (40%), 
  • Asian American (37%) and 
  • Native American/Alaska Native (26%) businesses grew more slowly than for women of color in general but faster than overall women-owned businesses and all businesses. 
women owned business

Trends in the Growth Rate of the Number of Women-Owned Businesses VS. All Firms (Source: The 2019 State of Women-Owned Business Report)

As of 2019, women of color accounted for 50% of all women-owned businesses. Today, they are up to 54% (estimated). 

However, the disparity between minority and non-minority women is increasing. 

  • In 2014, minority-owned businesses averaged $67,800 in revenue; 
  • By 2019, the average had dropped to $65,800. 
  • In 2014, non-minority women-owned businesses averaged $198,500 in revenue; 
  • By 2019, the average had jumped to $218,800. 

From 2014 to 2019, the average revenue for women-of-color-owned businesses shrank, except for Asian women-owned businesses. As the number of minority-women-owned businesses surges, the entry of smaller, younger companies into the pool could be lowering average revenue figures for these businesses. 

women owned business

Closing the Revenue Gap for Minority-Women-Owned Businesses would have a huge impact on the economy. (Source: The 2019 State of Women-Owned Business Report)

We need funding, and we need it NOW!

The culprit of these gaps is the missed opportunity for female founders -especially Latinas and other minority women entrepreneurs- to secure funding.

According to a report by research firm PitchBook, “female founders secured only 2% of venture capital in the U.S. in 2021, the smallest share since 2016 and a sign that efforts to diversify the famously male-dominated industry are struggling.”

The report stated that “U.S. startups founded solely by women raised nearly $6.4 billion of venture funding in 2021, 83% higher than the total raised in 2020. The accelerated pace of funding is part of an exceptionally strong year for V.C. investment across the U.S., which eclipsed its previous record and topped nearly $330 billion in 2021.”

Although it was the second year in a row that women’s percentage of V.C. funding decreased, the overall dollar value of female funding rose because total funding levels in 2021 hit all-time highs, according to the report. 

economic equality,

funding “genderization” prevents women, especially Latinas and other minority women entrepreneurs, from expanding their businesses.  (Photo created by freepik)

It’s funding “genderization,” and this information proves it! 

“When women teamed up with a male co-founder, they tended to raise more,” says the report. Aggh… it makes me so mad! The mixed-gender female-male founder teams secured 15.6% of total venture cash in 2021, the highest amount since 2017! 

The truth is, these numbers have been almost steady for female founders, especially Latina entrepreneurs and other minority women-owned businesses, for quite some time. “Black female startup founders have received just 0.34 percent of the total venture capital spent in the U.S. in 2021; however, the dollars invested in their companies are on the rise,” an analysis of Crunchbase data shows.

“The dollar amount received in angel, pre-seed, and seed rounds for venture-backed Latinx-owned startups in the U.S. had barely budged since 2018 when $185 million went to Latinx-owned companies raising those earliest rounds,” Crunchbase data shows

In 2021, Latinx startups raising angel, pre-seed, and seed rounds only received $205 million, a mere $20 million increase from three years earlier. Almost all of the growth in funding that Latinx founders have seen in recent years went primarily to later-stage startups.

Female founders secured only 2% of venture capital in the U.S. in 2021, the smallest share since 2016, a sign that efforts to diversify funding in this male-dominated industry are failing. The statistic may sound familiar; it’s the exact same portion of capital startups founded by a solo female founder or an all-female team secured last year, too, according to PitchBook.

According to a DocSend data report , potential investors spent 50 percent more time scrutinizing the slide that details milestones and growth metrics of the company of all-female teams’ pitch decks than they do of all-male teams’ pitch decks. 

In a male-dominated industry, V.C. firms with female decision-makers represent less than 10% of all firms, and 74% of U.S. V.C. firms have zero female investors. 

But do we need women sitting on those seats to give to women? Isn’t it enough for women to be talented and solid in their business proposition to receive the funding they need? 

What does a male founder’s presence guarantee that a female founder doesn’t in the views of funders? 

At the end of the day, venture capital is still a relationship-driven industry. What are “people with money” networks not offering to women that they are contributing to men? Why are they not opening doors for them?

Funding “genderization” prevents women, especially Latinas and other minority women entrepreneurs, from expanding their businesses. But it is also hurting an economy that could grow exponentially, and it has been proven ten times over. 

Women need to understand that funding “genderization” in business is a serious discrimination and civil rights issue – a matter of “Sex and Gender Discrimination Law” as much as it is in the workplace. Until we do, we will keep making coffee and updating calendar schedules. 

You might be interested: Gender washing: seven kinds of marketing hypocrisy about empowering women

Why more minority founders aren’t backed by venture capital funding

Funding for any new business venture is a critical step that will often determine its ultimate success. Many businesses sink far too early in the process when founders are unable to secure access to capital. Unfortunately, women and minority business owners are more likely to be denied venture capital funding and bank loans compared to white, male founders.  

Why aren’t more minority founders backed by venture capital funding? (Business card photo created by rawpixel.com – www.freepik.com)

According to an article by Forbes, in the past year, only 2.6% of venture dollars went to minorities and 2.2% went to women. In total, that is only $4.2 billion out of the $87.3 billion venture capital was distributed. Additionally, as of January 2021, only 93 Black and 58 Latinx women have ever raised over $1M.

This lack of VC funding for women- and minority-owned businesses is part of an ongoing cycle and diversity issue within the entire venture capital process. The fact of the matter is, diverse venture capitalists (VCs) and limited partners (LPs) will be more likely to invest in diverse founders and entrepreneurs. But so far, these roles have been saturated predominantly by white, male individuals. 

Breaking old patterns 

In an article by Fast Company, Leah Solivan discusses her experiences in securing venture capital funding for her startup and shares ideas on how the old pattern can be broken. In sharing her experience she describes how she first struggled to secure funding because she “didn’t match the pattern.” As a woman and a Latina, these modifiers made her an “other” in the eyes of traditional venture capitalists. She was not the typical founder. 

“VCs had an idea of what successful founders looked like, and they didn’t look like me,” Leah shared in her article. “It took another woman of color hearing my pitch to open up opportunities for me. And that woman, Ann Miura-Ko, was only in a position to say “yes” to me because another VC (Floodgate’s Mike Maples) took a chance on her. As a founder and CEO, I recruited a diverse team of talented individuals who brought different backgrounds and life experiences to the table. Many of these people have gone on to become founders themselves, building their own teams. Others have gone on to become venture capitalists. This is the virtuous cycle of wealth creation in action. And all it took to get it going was one VC deciding to take a chance on someone who didn’t match the pattern.”

This process that she describes is exactly how we can work to break old patterns within the venture capital process. We need diverse LPs who can then fund venture capital funds. And diverse VCs will then seek out and fund diverse founders. These founders can then give opportunities to their diverse team members and employees who can then grow to become their own founders or investors. 

Minority business owners and entrepreneurs, especially Latinos, have great potential to grow and thrive with the right backing. According to the Stanford Research 2020 State of Latino Entrepreneurship Report, Latinos are starting businesses at a faster rate than the national average across several industries, growing 34 percent over the last 10 years compared to just 1 percent for all other small businesses. Additionally, the report showed that over the past two-years, Latino-owned firms grew revenue at an average of 25 percent per year while white-owned businesses grew revenue at 19 percent.

Moreover, much of the growth in the number of new businesses among Latinos has been driven by women. Latinas represent 40% of all Latino business owners and the number of Latina-led employer firms has grown 20% within the last five-year period.

Forbes also reported that in the last year, 40% of new businesses were started by women and 47% of those businesses were started by minority women. 

You might be interested: Dr. Marlene Orozco demystifies misconceptions about Latinas through data 

We need diverse venture capitalists to support diverse founders

“Capital remains in the communities that manage it,” says Ivelisse Rodriguez Simon, Managing Partner of Avante Capital. Earlier this year, Ivelisse spoke as a panelist during Latina in Business’ virtual panel, “Latina Small Business Post-Covid: Recovery Resources and Trends. There she shared trends in investment capital and discussed why many women and minority owned businesses struggle to access capital. 

Ivelisse Rodriguez Simon, Managing Partner of Avante Capital.

There’s about $70 trillion of capital to manage in the United States and only 1% of that capital is managed by women or people of color. So even though women and people of color represent 75% of the US population, we only manage 1% of the capital. And the result of that is that our communities don’t get access to that capital.” 

To break this cycle, we need diverse venture capitalists and limited partners. Ivelisse says that this is an issue Avante has been really committed to. “Not only supporting women and people of color managing businesses but really trying to get women and people of color into this industry to manage capital so that we can go out and find entrepreneurs from our communities and help them grow. Because if there are not many people in my seat that look like us, our people are never gonna get capital,” she says

Don’t miss our Summer Speakers Series and Networking Blast Events throughout August!  Interested in learning how to access business funding for your venture? Sign up for our August 11th workshop, “Resources to Increase Your Business Revenue.” 

While pushing for more diversity throughout the various positions in the venture capital funding process, we also need to hold venture capitalists accountable. It should not only be the job of diverse and minority venture capitalists to fund diverse founders and entrepreneurs. More venture capitalists need to be willing to take risks. After all, is that not the point of “venture” capitalists. 

As Leah Solivan nicely said, “Venture capital was once a business that took big bets on outsiders—it wasn’t long ago that the college drop-out computer nerd cliché was a novel, risky opportunity. As the industry has matured, we’ve defaulted to pattern matching (which too often means young, white males that resemble those once-novel success stories) instead of seeking out founders of different backgrounds, different geographies, different skill sets, and different demographics. Our current cycle tries to play it safe. There’s nothing virtuous about that, and it also runs contrary to the ethos of venture capital—which is about taking a chance on something or someone with the potential for disruption.” 

We need diversity in all stages of the venture capital process. We need to break-down old patterns and biases about what a founder looks like. And we need to hold traditional venture capitalists accountable and push them back to their roots, to take risks on something new, and take a chance on the underdog.