Both New Jersey and Pennsylvania are helping to bankroll local tech startups.
And the states are turning to venture capital firms to get the most bang for their buck.
Think of it as an episode of ABC’s “Shark Tank” — with Pennsylvania and New Jersey looking to get in on the ground floor with local early-stage ventures.
“The goal is help startup companies with ideas take those ideas to market launch and eventually production and success,” said Steve Kratz of Pennsylvania’s Department of Community & Economic Development.
The Commonwealth Financing Authority — which is overseen by DCED — recently announced it was channeling $5.5 million into two Pennsylvania-based venture capital funds that will invest in early-stage tech startups across the state.
“It will lead to future job creation and also create opportunities for spinoff companies in the life sciences and technology sectors of the state’s economy,” Kratz said.
New Jersey also is investing.
The venture funds promise to find $3 in private investment for every taxpayer dollar.
Stephen Herzenberg of the Keystone Research Center says it’s becoming more and more common for states to use venture capital this way.
“Our view is that these kinds of what we call ‘grow your own’ programs are a better bet than the traditional industrial recruitment programs,” Herzenberg said.
Still, he says, it boils down to investing smartly — and making sure risk is tied to adequate reward.
Including the latest round, Pennsylvania has committed $50 million to various venture funds since 2006.