New Jersey creates $50 million venture capital fund

New Jersey will borrow $50 million in part to create a venture capital fund that will develop businesses and create jobs, officials announced Monday.

Associated Press The Miami Herald

The first $10 million will be dedicated to new businesses in biotechnology and pharmaceuticals, Treasurer John E. McCormac said.

That investment is expected to grow by attracting commercial investors and federal grants, McCormac said. A private manager hired by the state will oversee the fund.

Dedicating the first $10 million to biotechnology will help lure investors who might otherwise offer money to companies outside the state, McCormac said.

"If the state is throwing $10 million into a fund, people will notice," he said.

The remaining $40 million will be allotted in November. It will be used to create jobs and businesses, but state officials have not decided if it will go to new venture capital funds.

To collect state help, a business must be located in the state. Money is not expected to allocated for at least a year.

The state will rely on experts from the Biotechnology Council of New Jersey and a private fund manager it hires to make decisions on awarding the money.

To pay for the program, the state will use a portion of tax money it now collects from businesses that benefit from existing incentive programs. The cost of the loans will be below what the state collects each year in those taxes, McCormac said.

The initial $10 million could triple once other investors are attracted to New Jersey businesses, said Debbie Hart, president of the Biotechnology Council of New Jersey.

"This is exactly what we need," she said.

Other states have created similar programs, forcing New Jersey to stay competitive, she said.

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