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Princeton-based Venture Capital firm SOSV to establish the U.S. Headquarters for Tech Startup Program in Newark

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the staff of the Ridgewood blog

Newark NJ,  the New Jersey Economic Development Authority (NJEDA) and Princeton-based venture capital firm SOSV intend to form a new entity (HAX LLC) to bring SOSV’s acclaimed HAX hard tech startup development program to Newark.  SOSV will also establish the U.S. headquarters of the HAX program at the Newark site.  HAX provides complete support for emerging companies, including a $250,000 initial investment in each participating company, 180 days of hands-on collaboration, and a global founder community for early stage founders building hard tech startups. Newark was selected as the location for the new HAX program site and the U.S. HAX headquarters through a competitive search that compared locations across the country.

Pending a decision by the NJEDA Board to approve, the new SOSV/NJEDA entity will combine science and engineering to focus on industry-level innovation in areas related to the re-industrialization and decarbonization of the U.S.. According to the non-binding letter of intent signed today, the NJEDA Board will consider an investment of $25 million in HAX LLC. As its contribution, SOSV intends to commit to take 100 companies through the HAX program over the next five years and invest $25 million in these startups. These companies may receive up to $50 million from SOSV as follow-on financing to support the companies as they grow. With this support, companies participating in the HAX program are expected to create at least 2,500 new, high-paying jobs in the decade ahead as well as attract millions in new capital.

“From the electric light bulb to the telecommunications and pharmaceutical industries, New Jersey has a long history as the birthplace of industries,” said SOSV Founder and Managing Partner Sean O’Sullivan. “Governor Murphy’s vision for innovation and commercialization works hand in glove with HAX’s strategy of igniting an industrial renaissance for the United States. And society as a whole has an urgent need for next generation hard tech companies to solve our current challenges in human and planetary health.”

O’Sullivan cited several factors that attracted SOSV to Newark, including the city’s proximity to major airports, mass transit, ports and highways; access to an unparalleled talent pipeline fed by world-class colleges and universities; high-quality internet infrastructure;new innovation-focused programs introduced by Governor Murphy; and the tri-state region’s number two ranked global venture capital ecosystem.
“We are excited about the arrival of the HAX hard tech startup program in Newark and we look forward to working with HAX and the SOSV/NJEDA partnership to accelerate Newark’s growth as a technology hub,” said Mayor Ras J. Baraka. “One of the major initiatives in our recently announced 2-year Equitable Economic Recovery Plan is a partnership with the Newark Alliance to support startups in Newark’s fast-growing tech sector, so this fits well with our economic development strategy and will provide more opportunities for our residents.”

Establishing the HAX headquarters in Newark brings the #1 Most Active VC globally at Angel and Seed stages and #3 most active VC globally in Q2 2021 to the city. To date, HAX companies have collectively raised a total of $1.8 billion, of which $105 million was invested by SOSV. The current aggregate valuation of all HAX companies is $8 billion. The creation of the new HAX entity in Newark provides a one of a kind, best-in-class startup development program focused on the re-industrialization of the US economy and renewing the US industrial base. SOSV has a proven track record of investing in over 100 manufacturing and industrial startups including Formlabs, a 3D printing startup recently valued at over $2 billion dollars and Opentrons, the lab equipment startup operating New York City’s automated COVID-19 testing.

Along with the $25 million investment, SOSV intends to commit to mentoring at colleges and universities, local manufacturing sourcing, engagement in workforce development, and creating local advisory boards.
Each company that participates in HAX receives an initial investment of $250,000 and access to SOSV’s industry-leading technical assistance and facilities. HAX participants will also benefit from access to an extensive network of SOSV investor contacts at seed, and Series A, and beyond, which will facilitate follow-on investment from other VCs on the order of ten times what SOSV invests.

The new SOSV/NJEDA entity will add to these benefits with special events and a curriculum for participating companies, including an SOSV/NJEDA-hosted “Demo Day” where participants will have an opportunity to pitch their companies to a live audience of investors, strategic partners, and other media. Startups will also be matched with world-class mentors including advanced manufacturing executives, venture capital firms, serial entrepreneurs, and corporate executives possessing deep domain expertise.

HAX’s Newark office will be the flagship location for HAX in the U.S. and the center of operations for a new network of programs across the country. HAX plans to lease up to 60,000 square feet of space in Newark that will include space for 200 founders and staff as well as fabrication and prototyping workshops. HAX aims to welcome its first companies at the Newark location in spring 2022. The HAX program in Newark will be led by HAX Partner Garrett Winther and SOSV General Partner Duncan Turner.

New Jersey has leveraged exceptional incentives for early stage startups, such as matching investment, angel/seed investor refundable tax credits; the state’s successful Net Operating Loss Program, which enables tech and life sciences companies to sell their New Jersey net operating losses and/or research and development (R&D) tax credits for cash; and NJ Accelerate, which encourages the participation of New Jersey Entrepreneurs in high-quality accelerator programs with matching investment up to $250,000.

In addition to these initiatives, Governor Murphy recently signed legislation establishing a ground-breaking funding tool called the NJ Innovation Evergreen Fund, which will allow fund managers, such as SOSV, to apply for up to $5 million per deal in matching government funds for investments in New Jersey-based companies. That number increases to $6.25 million for fund managers who are investing in women- or minority-owned companies or in companies that are located in a historically disadvantaged community.

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