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New Jersey is losing its high tech edge. At the end of the 20 th century, New Jersey appeared to be a knowledge-driven economic powerhouse. But aggressive investments in technology-based growth in other states and nations have threatened New Jersey’s potential for future prosperity. As just one example, New Jersey’s medicine chest—its share of national pharmaceutical jobs – emptied by nearly a third, from 20% to 14%, over the last fifteen years. At the same time, the State’s share of national employment dropped in every single one of ten vital technology sectors, from telecommunications to the internet and computer design.

This startling high tech erosion has been magnified by a dramatic loss of high-paying manufacturing and sophisticated professional and service jobs. As a result, the State’s relative income position has fallen every year during this decade.

Strategic investments in New Jersey’s science and technology – guided by a clear and compelling science and technology policy – are essential to New Jersey’s future economic prosperity.

The Goal: Thriving and growing high technology businesses in New Jersey, leading to increased numbers of high paying jobs.

Policy Summary: Invest State resources in a series of near-term, mid-term and long-term programs designed to promote high technology job growth and company success. These investments will be focused on the critical elements of high technology success, or the “Creativity Cascade”: The creation of intellectual property (IP), the efficient acquisition and development of IP into commercial product opportunities, and the promotion of an entrepreneurial business climate in which IP can be converted into economic growth.

The Metrics: Every three years, the results of New Jersey’s sustainable investments will be measured by job creation and economic growth in the 10 key high technology categories:

  • Pharmaceuticals and Medicine
  • Computer and Electronics Manufacturing
  • Telecommunications
  • Wired Telecommunications
  • Wireless Telecommunications
  • Internet Service Providers/Data Processing
  • Scientific Research and Development Services
  • Computer Systems Design and Related Services
  • Management, Scientific and Technical Services
  • Architectural, Engineering and Related Services

The Plans: The near-term plan is designed to jumpstart the high technology recovery by making targeted investments to enhance the current state of New Jersey’s Creativity Cascade. Key elements of the near-term plan include:

  • Fostering collaboration and technology transfer between New Jersey’s universities and high technology companies
  • Enhancing entrepreneurship through educational initiatives, business plan competitions, etc.
  • Increasing venture capital funding for New Jersey-based high technology companies
  • Recognizing entrepreneurs and other important contributors to the Creativity Cascade via awards, publicity, etc.

The mid-term plan is designed to increase the amount of IP available for entry into the Creativity Cascade and to enhance the capabilities of New Jersey’s high technology workforce. Its elements include:

  • Incentives for established high technology companies to transfer “on the shelf” IP to entrepreneurial entities
  • Funding for New Jersey’s universities to provide specific, industry-identified training to Ph.D. and M.B.A. students and their faculty mentors
  • Investments in technology transfer at universities including commercialization activities and establishment of best practices

The long-term strategy seeks to increase the overall amount of IP generated in New Jersey, thus generating more of the essential raw materials required for the Creativity Cascade. It will include:

  • Establishing Centers of Excellence at New Jersey’s research universities in targeted areas selected for their likely contribution to economic growth
  • Recruiting eminent researchers to New Jersey’s universities with track records of IP generation in targeted areas

The Caveat: It is crucial also to follow the first principle of “Do no harm” in promoting the Creativity Cascade. That is, the state must avoid taxes, regulations and other burdens on high technology growth that would force entrepreneurs, high technology companies and their workers to move highly mobile IP to other states and nations with friendlier environments.

The Cost: The near and mid-term plan is expected to cost approximately $22 million per year, an amount that should be invested annually for at least 5 years. Two additional one-time investments are expected to cost $20 million each. The long-term plan will require an initial investment of $300 million, to be invested over three years; thereafter, the initial elements of the long-term plan should be self-sustaining via federal and other grant funding and additional elements should be considered.

The Targets: Extensive research and analysis by the Jobs Growth Commission identified five key areas of science and technology research for the State. The plan will focus primarily on those areas:

  • Stem cells and life science research
  • Nanotechnology
  • Telecommunications
  • Renewable energy
  • Homeland security

The Implementation: The Commission on Science and Technology will establish and administer the programs, will measure their success, and will report its progress to the Governor and Legislature each year. The Commission will give advice and counsel to the Governor on science and technology in the state. The Governor’s direct involvement will be a crucial element of success.

Details

Short-term Strategies: Developing Entrepreneurs

  • Entrepreneurial Partnering Fund – A seed fund providing $300,000 to $500,000 grants to companies for specific commercialization projects working with universities. A portion of the funds might be spent on university resources. Program review will include VCs as project judges and mentors.
  • Technology Business Plan Competition – A statewide competition encouraging cooperation between business schools and technologists. Winners receive incubator space and a small start-up grant. Panel of VCs and successful entrepreneurs will judge the competition.
  • Technology Fellowships – A successful new program placing recent PhD graduates of New Jersey universities in entrepreneurial technology companies in the state.
  • Venture Capital Investment  – State investments to create funds that both invest in New Jersey companies and draw companies to New Jersey, such as the New Jersey Technology Council Venture Fund and the Garden State Life Sciences Fund, have proven very successful and should be extended.

Mid-term Strategies: Foundation for Commercialization

  • Technology Transfer Investments – Commercialization activities at universities especially for technologies of interest to New Jersey companies. Development of best practices for technology transfer and resources for clinical trials. Hire Entrepreneurs in Residence and build closer ties to VC community.
  • Training high-end technology workers and entrepreneurs – Coordination between technology industries and universities on curricula for PhD and MBA level training and grants for curriculum development. The most common need expressed by the technology community is that New Jersey needs to produce more workers trained at this level and ready to enter the entrepreneurial market.
  • Shelf IP investment – Many established New Jersey technology companies have intellectual property “sitting on the shelf” that they have decided not to develop. Entrepreneurial companies can develop the IP into useful products, but this requires an incentive to encourage the established company to license the IP to an entrepreneurial venture. One time $20 million investment.

Long-term Strategies: Investing in Ideas – New Jersey’s Edison Innovation Fund

  • Eminent Scholars Endowment program – A new fund established to recruit world-class scientists to New Jersey PhD granting research universities in areas of strategic importance to our technology industries. These would be at the level of $5 – 10 million per recruit.
  • Centers of Excellence – A new fund to create and support centers of excellence at New Jersey’s PhD granting research universities in areas important to the New Jersey economy, including nanotechnology, life sciences (including stem cell and clinical research), renewable and alternative energy, telecommunications, homeland security and research-based information technology.

Basic Program Needs

Annual Budget – Near and Mid-term Plan

Entrepreneurial Partnering Fund

$ 10,000,000

Technology Business Plan Competition

$ 500,000

   

Technology Transfer Investments

     In-house commercialization at universities

$ 3,000,000

     Entrepreneurs in Residence

$ 1,000,000

     Clinical Trial Resources

$ 1,000,000

Technology curriculum development (5x$200,000)

$ 1,000,000

   

Technology Fellowships (15/yr x 2yrs x $55k)

$ 1,700,000

Technology Business incubators

$ 2,000,000

Small Business Innovation Research program

$ 1,000,000

   

Administration (including 9 FTEs)

$ 800,000

Total annual budget for basic program

$ 22,000,000

One time investments

Venture Capital fund $ 20 million

Shelf IP Investment $ 20 million

Additional relevant programming

Stem Cell grants $5,000,000 in FY 06

Manufacturing Extension Program $1,200,000 in FY 06

Long Term Plan – Edison Innovation Fund $300 million