Was waiting for this stuff to be brought up
ANGELS, OTHERS, REACT TO NEW OPPORTUNITIES PROVIDED BY ANGEL TAX CREDIT EXPANSION
August 1, 2019 Esther Surden
In June, the state legislature passed, and the governor signed into law, an expanded Angel Investor Tax Credit Program.
The program, which provides a tax credit for a percentage of an angel investor’s investment in a qualifying emerging New Jersey tech or life science business, will help attract early-stage and growth capital for innovative New Jersey companies.
Under the expanded program, the available tax credit has now increased from 10 percent to 20 percent of a qualified investment, with an additional 5 percent bonus available for investments in a business located in a qualified opportunity zone or in a low-income community, or investments in a business that’s certified by the state as minority- or women-owned.
According to an alert from the law firm McCarter & English, the expanded program will only go into effect for investments made after January 1, 2020. However, the New Jersey Economic Development Agency (NJEDA) has clarified that the investment date is defined as one of the following milestones, whichever is the latest:
- The signing date;
- cash transfer date; or
- SAFE or stock issuance date, as long as the issuance is within a reasonable time period following (1) or (2) above.
NJTechWeekly.com asked local angels and other significant members of the New Jersey tech ecosystem to tell us what they thought of this new law, and whether they thought it would bring new investment to minority-led and women-led startups here in New Jersey.
David Sorin, chair of the Venture Capital & Emerging Growth Companies practice at McCarter & English(East Brunswick), is a well-known attorney specializing in startups. He was very positive about the change.
He said, “We at McCarter are seeing firsthand the positive effects of the incentive put in place by the Angel Tax Credit Incentive and the significantly heightened interest on the part of both investors and entrepreneurs resulting from the enhanced credit. We currently are working on several financing transactions for technology companies driven, in part, by the bold action taken by the NJEDA, the state legislature, and the governor.”
Mario Casabona, founder and CEO of TechLaunch and Casabona Ventures (both in Kinnelon), noted, “As an angel investor, the expansion of the New Jersey Angel Tax Credit from 10 percent to 20–25 percent is a game changer for me. I have already invested in a New Jersey-based women-owned business with the tax credit in mind. When my convertible note investment converts to equity next year, I’m definitely applying. This expansion also incentivizes outside-the-state investors to invest in New Jersey-based companies. The New Jersey Angel Tax Credit helps investors like myself mitigate the risk of investing in early-stage ventures.”
Benjamin David Novak, of Morgan Lewis (Princeton), a startup attorney who’s also an angel investor, said that the angel tax credit expansion is a step in the right direction, but he thought that it possibly doesn’t go far enough to help New Jersey compete.
“Several states have adopted angel investor tax credit programs to incentivize investors to invest in startups within their state,” he said. “However, the incentive value of these programs ranges significantly from state to state. For example, Maryland has a program that provides a 50 percent refundable tax credit to qualified investors that invest in qualified Maryland biotechnology companies. New Jersey, to its credit, has had an angel investor tax credit program for some time. But the 10 percent refundable tax credit, when balanced against the application fee, success fee, and administrative burden, resulted in a limited incentive, especially for those investors writing checks for less than a few hundred thousand dollars. Assembly Bill 5604, which was recently signed into law by Governor Phil Murphy, took this program and gave it some teeth. Pursuant to this bill, the 10 percent credit was increased to 20 percent, with an additional 5 percent for certain qualified investments, resulting in a refundable angel investor tax credit of up to 25 percent. Time will tell how much this program incentivizes investment in the state, but there is no doubt that this is a big step in the right direction.”
Speaking for the Jumpstart New Jersey Angel Network (New Brunswick), Gina Tedesco, who is on the board of trustees, said, “Jumpstart New Jersey Angel Network sees the angel incentive program as a win-win for both New Jersey-based investors and entrepreneurs. This tax credit gives local investors more purchasing power, as it mitigates risk and expands available capital to growing entrepreneurs throughout the state. We expect we will see an increase in demand from new investors looking to join our network, resulting in increased dollars available for investment. As angels investing real dollars in startup companies, Jumpstart New Jersey Angel Network welcomes this bold move to increase incentives to spur growth in the New Jersey startup innovation ecosystem.
For Michael (President ) Anderson, cofounder and CEO of MPAC Solutions (Newark), the incentives do not go far enough in creating opportunities for people of color.
“Any tax credits for investments in opportunity zones should reflect the demographics of the Opportunity Zone. For instance, in an opportunity zone in Newark that is 90 percent Black and Afro-Indigenous, tax credits or exemptions should only be allowed for investment in companies or projects with significant Black and Afro-Indigenous leadership. Governor Murphy must create rules and best practices around systematic economic enfranchisement in New Jersey,” he said.
“With regard to the 170+ Opportunity Zones, only investors that have capital gains benefit from opportunity zone investment policies. Who has significant capital gains? The people who benefitted from the status quo … a status quo that institutionally paralyzed people of color. For instance, Blacks have become nearly two-thirds of the prison population, while only constituting one-eighth of the general population.
“I’ve listened to EDA head Tim Sullivan and Governor Murphy promise diversity in venture investing, while supporting firms and an ecosystem that deliberately marginalizes whole communities and punishes champions of inclusion that speak out against financial injustice. Without concrete stipulations and uncomfortable yet progressive conversations around social equity, we will continue to see minorities and women only earn 7 percent of the state’s contracts, as was the case in 2018.
“This past quarter, women earned 3 percent of all venture capital, which continues to experience its largest funding periods as an asset class. Everyone suffers when we block economic progress for all or create policies that dance around the changes necessary.
“I am in favor of innovation. I do not trust the effectiveness of any proposed investment initiative that is not followed up with programmatic equity partnerships on the part of corporations and government, which currently power the state’s VC pipeline and supply the investment firms that fail the people with dry powder. Only programmatic equity partnerships with minority investors, and dedicated capital from corporations, governments, sports teams, universities, etc., will lead to sustainable economic development, and create diverse inclusive wealth.
“I challenge Governor Murphy to work with MPAC, and our allies in local and federal government working to stimulate minority businesses. Private investors without genuine interest in creating diverse wealth are misleading the public about making a difference, while avoiding their fair share of tax contributions. Unfortunately, we the people are financing investors that are excluding us from the largest era of wealth creation in American history. We need to have an honest, open conversation followed up with action that catalyzes innovation through programmatic investing with stakeholders that represent underserved communities.”
Tags: Angel Investor Tax Credit, angel investors, Benjamin David Novak, Casabona Ventures, David Sorin, Gina Tedesco, Jumpstart New Jersey Angel Network, Mario Casabona, McCarter & English, Michael (President) Anderson, Michael Anderson, Morgan Lewis, MPAC Solutions, New Jersey Economic Development Authority, NJ EDA, tax credits, TechLaunchPrevious:Marlabs Dedicates New Divergence Digital Innovation Labs in Piscataway to Take on Digital Disruption
Esther is the Founder and Editor in Chief of NJ Tech Weekly, and a contributor to PhillyEnterpriseTech. This article from NJ Tech Weekly is reposted here with her permission.
COPYRIGHT © 2019 NJ TECH WEEKLY ALL RIGHTS RESERVED
Eurazeo, a leading global investment company listed in Paris with €17.7 billion in assets under management, has announced its acquisition of Elemica, a leading cloud-enabled digital supply network. Eurazeo will support Elemica’s expansion and global growth strategy into new industry verticals, geographies and product offerings.
Elemica was acquired by Thoma Bravo, a leading private equity investment firm, in 2016. Eurazeo Capital will acquire full ownership of Elemica alongside its management team and will invest approx. $250 million (equity invested by Eurazeo and its affiliates), subject to various adjustments between now and the completion of the planned transaction. The transaction is expected to close in the third quarter of this year. Evercore served as strategic advisor to Eurazeo.
My article From December 2018:
Elemica is one of the Philly area’s best-kept tech secrets
Elemica is one of the Philly area’s best-kept tech secrets. From its Wayne headquarters, Elemica manages real-time supply chain and market data for some of the World’s leading companies.
Founded in 2000, Elemica refers to itself as “the leading Digital Supply Network for Chemical and other Process Manufacturers.” It originally was a consortium, and the partners were owners as well as customers. Original partners included Dow, DuPont, BASF, Shell Chemicals, Bayer, Atofina, BP and Rohm and Haas. The initial funding was $100 million, provided by the consortium members themselves.
Its location near SAP’s North American headquarters was likely no coincidence, as most of its members were large SAP ERP customers. Elemica customer applications exchange data at various points with SAP ERP, may be integrated with SAP Ariba, or generate output which can be analyzed more deeply with BI tools on SAP HANA. Elemica does not view SAP Ariba as a competitor, but as a complementary provider.
Elemica’s original location was in Center City before moving to Wayne. It has a satellite office in Atlanta where some of its tech leadership is located.
Elemica is what is called a “networked” supply chain system, meaning that each customer is not isolated within the system, but can interact with others on the network to share information and do transactions. This is important because Elemica customers frequently buy from each other at different levels of the supply chain.
The original business model was effective to the point that the format worked, but with limitations. Since the principal customers were also owners, Elemica was managed more like a shared cost center rather than a market-driven business. In addition, Elemica needed new capital to modernize and expand, find new customers and new ways to use the data it its customers generate.
So in 2016, Elemica was sold to the highly respected (by most) enterprise tech oriented PE firm Thoma Bravo . Terms were not disclosed.
“The goal remains to grow Elemica’s business network into a multi-trillion-dollar commerce engine annually,” said John Blyzinskyj, CEO of Elemica, at the time of the Thoma Bravo deal. “This acquisition will accelerate the time to market for solutions that automate and orchestrate mission critical supply chain processes across a global community of buyers, suppliers and logistics providers. Thoma Bravo’s exceptional track record and proven expertise in our industry will enable Elemica to further capitalize on its growth and leadership.”
With the original ownership structure removed, Elemica could now concentrate more on broadly on the market it serves and price and allocate resources in a way that better reflected market needs. It also presumably gained the funds needed to become more state-of-the-art technologically.
Under Thoma Bravo ownership, Elemica has worked on improving its external communication, improving the depth of supply chain visibility, and completing an overall digital.transformation, Elemica Director of Product Marketing David Cahn told me in an interview. (Dave, a Villanova grad, has been in every corner of the enterprise software world.) Another use case for Elemica to explore is the value of its customers aggregate data. For example, since it has such a strong position in the chemical industry, the aggregate of its customers’ supply chain data might paint a more complete picture of what’s happening in that market.
Also, Elemica is conducting a blockchain pilot with a major customer and a third-party software firm.
Elemica hosts its cloud on Amazon Web Services, with in-memory capabilities.
A recent challenge has been adjusting to changes resulting from the Dow / DuPont merger.
Cahn discussed the difficulties of moving a business from a service bureau mentality to a digital mode.
Elemica now has revenue in the $50 million range (though I don’t know what it sees as its addressable market) and is growing at 10% annually. It has around 200 employees.
Zulily, the Seattle-based online retailer acquired by Liberty Media for $2.4 billion in 2015 to be part of QVC, has laid off an undisclosed number of its Seattle and Columbus employees, the tech site GeekWire reported. Zulily has 1300 employees in Seattle alone as of January.
In a note to employees obtained by GeekWire, Zulily CEO Jeff Yurcisin said the company was at “a critical inflection point”, and changes were required.
Zulily had already been working on a rebrand focusing more on adults, while it earned its chops from a “kids & moms” customer base.
Qurate Retail, the recently established unit QVC now reports thru, reported in May that quarterly revenues from Zulily were down 5 percent to $397 million. The decline, following several quarters of growth, appeared to be broad-based, not limited to particular segments.
Overall, Qurate Retail revenue decreased 4% in the 2019 1st quarter.
Yesterday, Qurate Retail announced that former Disney exec Leslie Ferraro would head up QVC and HSN in the US, reporting to Qurate Retail Inc. president and CEO Mike George.
I thought it was a neat gimmick when Sprint brought in Paul Marcarelli, the former Verizon guy, for its ads. Just a gimmick.
But now, three or four years later, he’s still their spokesperson. And doesn’t add much, in my opinion.
Now, if and when the Sprint/ T-Mobile deal gets finalized, I imagine he will be retired again. Though probably not hurting.
But maybe the new Dish wireless competitor will pick him up.
(Ed note: While this story rightly focuses on Jane Walentas, her husband David went to the same business school as I later attended, Darden (UVa), so I had a general knowledge of his career.
Walentas essentially made a huge bet going long on Brooklyn real estate before it was trendy, and it paid off in a big way, eventually.
David and Jane have obviously also accomplished great things philanthropically..
Moore College of Art & Design Receives $5 Million,
Largest-Ever Single Gift from Alumna Jane Walentas
Philadelphia, PA – New York artist and philanthropist Jane Walentas, a 1966 graduate of Moore College of Art & Design, and her husband, David Walentas, have provided Moore with a gift of $5 million—the single largest donation in the 170-year history of the College. This generous gift will fund scholarships for deserving women artists who wish to receive their education at Moore, the nation’s first and only visual art and design school for undergraduate women.
Jane Walentas, who also received a Master of Fine Arts degree from NYU and worked for many years as an art director in cosmetic advertising for Elizabeth Arden, Avon and Estee Lauder, is a longtime member of Moore’s Board of Trustees, and played an integral role in the launch of Moore’s Visionary Woman Scholarship Program in 2005. She is well-known for restoring and operating Jane’s Carousel, a historic 1922 carousel that is located in the DUMBO section of Brooklyn—an area that was developed by her husband, David Walentas, who attended the University of Virginia on a full Navy ROTC scholarship. Jane worked in her DUMBO artist studio to restore the 48 carousel horses to their original glory, working first only with a carpenter and later, a team of artists to bring the carousel to life. She worked on and oversaw every single detail of the restored carousel. The carousel now stands as a treasured landmark in Brooklyn Bridge Park.
Pictured above: Jane and David Walentas in 2017. Photo by Academic Image.
The Walentas family has a long history of supporting the arts and education. Jane is the Executive Director of the Sharpe-Walentas Studio Program, which awards rent-free non-living studio space to 17 visual artists for year-long residencies in DUMBO, Brooklyn. Developed for artists, by artists in 1991, the Walentas’ took over the program with new sponsorship and commitment from the Walentas Family Foundation, continuing the legacy of founder Marie Walsh Sharpe. The Walentas Family Foundation also established the Neighborhood School Grants program with the belief that vibrant and successful schools are fundamental parts of communities. Since conception, the foundation has awarded dozens of school grants that aim to enrich students’ learning experiences through creative programming that may not supported by a school’s existing budget.
“We both believe in education, and David is a big believer in giving back because of his opportunities as a result of his scholarships at UVA, so it’s very exciting to be able to help students who can’t otherwise go to school. My hope is that with this gift it will encourage others to help expand the endowment,” says Jane Walentas. “Moore, being a small, all-women’s college of art and design, is still relatively unknown outside the Philadelphia area and I felt strongly about bringing talented students from other regions to this extraordinary college. Moore was important to my past. I am privileged to be making a contribution that will help Moore continue to attract and educate the country’s brightest and most gifted young women artists.”
The $5 million donation to Moore will be used to create the Walentas Visionary Woman Scholarships. These scholarships will be part of Moore’s Visionary Woman Honors Program, which provides financial support and sustained mentorship to talented, motivated and future-focused students, both inside and outside of the classroom. Since 2005, Visionary Woman Scholarships have increased the level of opportunity and access to Moore’s high-quality visual arts education for a broad and diverse array of women, many of whom may not have otherwise had the ability to pursue careers in art and design.
The Walentas’ record-breaking gift expands upon this legacy of opportunity. The endowment will provide scholarships each year to 10 non-Pennsylvania residents accepted to Moore who display exceptional artistic and academic promise. Each scholarship will be automatically renewed for up to four years of full-time enrollment with the upkeep of the student’s GPA.
“There is nothing nobler that anyone can do than to provide an opportunity for deserving and talented students to achieve their dreams of going to college,” said Moore President Cecelia Fitzgibbon. “We are deeply grateful that Jane—a notable Moore alumna—and David believe so strongly in the mission of the College, and in the ability to transform lives through the study of art and design.”
The first Walentas Visionary Woman Scholars will be chosen among students attending Moore for the first time this fall, as part of the incoming class of 2023. The College will begin to award the scholarships from the endowed fund in fall 2020.
Jane and David Walentas have also established the Jane Walentas ’66 Endowed Scholarship and International Travel Fellowship at Moore, as well as the Jane and David Walentas Endowed Fellowship. With their new gift, they will play an even greater role in bringing emerging artists who display great talent to Philadelphia, a growing and evolving destination for artists and for art and culture.
Moore College of Art & Design educates students for careers in art and design. Founded in 1848, Moore is the nation’s first and only women’s visual arts college for undergraduates. The College’s career-focused environment and professionally active faculty form a dynamic community in the heart of Philadelphia’s cultural district, surrounded by world-class museums. The College offers ten bachelor of fine arts degrees for women and four coeducational graduate programs. In addition, Moore provides many valuable opportunities in the arts through The Galleries at Moore, Continuing Education Certificate programs for professional adults, the acclaimed Young Artists Workshop, The Art Shop and Sculpture Park. For more information about Moore, visit www.moore.edu.
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JP Morgan Chase CEO Jamie Dimon, an iconic leader in the financial community, came to Philadelphia yesterday to welcome InstaMed officially to the family, as the acquisition announced in May closed. InstaMed put itself up for sale in February.
I’ve seen the price mentioned as anywhere between $500 and $600 mllion.
Senior leadership, including the co-founders, CEO Bill Marvin and CTO Chris Seib, are staying on. Headcount is now at 275, according to a post by the co-founders. InstaMed’s data center operations remain in Newport Beach, CA.
Ownership by Morgan Chase likely means acquisitions will be more of a possibility. Instamed’s growth was completely organic.
InstaMed, founded in 2004 , raised $134 million. Osage Venture Partners, which was part of InstaMed’s early venture round, was one of the biggest beneficiaries of its success.
Financial Technology Partners LP and Pepper Hamilton LLP advised InstaMed, and Morgan Lewis & Bockius LLP advised InstaMed management.
Dimon was also in town last month for BIO 2019.
Clinical trials are often the biggest bottlenecks in the drug development process. Getting them completed faster and more accurately, and collecting precise data while controlling costs, are industry imperatives.
The extent of clinical trials’ importance are reflected in GV’s (formerly Google Ventures) interest in them. David Schenkein and Krishna Yeshwant, both physicians who lead the life sciences team at GV, want to revolutionize the process, they told Business Inside recently. They might invest in an existing clinical trials company, or start an entirely new one. “There’s a lot of infrastructure that needs to be built in order to start talking about machine learning in clinical trials, in clinical data. And so we’re well down the path of working on companies in that space.,” Yeshwant said.
Veeva Systems (NYSE; VEEV), with its market value approaching $25 billion, maintains its strong growth rate by having a fruitful ongoing product development pipeline. With the success of its Veeva Vault clinical information offering, itself organically developed and now accounting for a a majority of its revenue, a lateral move into clinical trial technology was inevitable and logical. Shared customers, shared expertise, and shared costs with its existing business all pointed that way.
Veeva already had developed one key asset for this, an application named eTMF (electronic Trial Master File), that is instrumental in digitizing the information collected in a trial. In some cases, eTMF replaced completely paper-based systems.
I spoke with Henry Levy, general manager, Veeva Vault CDM, about Veeva’s progress with its Veeva Vault Clinical Data Management System (CDMS) , a relatively new offering. Levy joined Veeva in late 2016 to head up its new CDMS efforts, following extensive experience with Accenture Life Sciences and a major CRO (contract research organization).
Levy, by the way, came to the US by way of Colombia and holds a bachelor of science degree in bioengineering from Penn. He has studied the Clinical Trials industry inside and out and probably knows his way around it as well as anybody.
You could hold an impromptu forum of CTMS industry leaders at a Main Line coffee spot. Philly is probably the capitol of the clinical trial tech industry, although actual trial activity itself is more dispersed. So despite Veeva’s headquarters being in California, the bulk of its CTMS initiative has been managed from its Radnor office were Levy is located.
Veeva sees the CTMS market as a $1 billion TAM (total addressable market) opportunity, Levy says, not that it expects to capture all of that, but hopes to have a significant share within 3 years in some segments. Veeva sees a total adressable market of $9 billion now for its entire enterprise, so it obviously considers the CTMS opportunity significant.
Veeva reported having 34 CTMS clients at the end of 2918, twice as many than at the end of 2017.
The current CTMS market is probably well in excess of $500 million and growing at a double digit annual rate for the next several years. Market size can be difficult to pin down due to the amount of trials conducted in house and the task of defining what revenues should be included as relevant. Recent IPO SmartSheet, for example, touts its product for CDMS use, but its difficult to quantify its use for that.
Veeva emphasizes these benefits from Vault CTMS:
- Better decision making: Enable proactive closed-loop issue management and improve strategic trial planning with a complete real-time view of trial status.
- Streamlined clinical operations: Provide one seamless system of record for shared CTMS, TMF, and study start-up content, improving efficiency and streamlining operations.
- Unify clinical: Leverage the most comprehensive suite of clinical applications on a single cloud platform to unify clinical operations and data management.
Unification of data and the elimination of silos are emphasized here as throughout Veeva’s product line
Veeva’s Vault CTMS product offering is self sufficient so that in some cases it can give clients an end-to-end technology package and let them go at it, while offering tech support. For others, Veeva will assist in trial management to the extent needed, Levy said.
In April, Veeva announced that a top 20 pharmaceutical company has selected Veeva Vault Clinical Data Management System (CDMS) as their global standard for EDC, coding, data cleaning, and reporting.
The competitive landscape is changing, with more consolidation and strategic moves to strengthen some market participants’ positions. Bracket bought CRF Health and became Signant Health, Dassault spent $5.8 billion to acquire Metadata in June, Oracle bought GoBalto, and IQVIA, formed through the merger of IMS Health and Quintiles, has made several niche acquisitions towards boosting its clinical trials capabilities.
When I mentioned GoBalto, a startup which uses data sources to seed trials more quickly with the desired population characteristics, Levy admitted that was a big win for Oracle. Which made me wonder whether Veeva, which has been very constrained on acquisitions in general, had been in the running for it. Levy told me he prefers organic growth.
There will always be room for niche specialists in clinical trials. For instance, Malvern-based Biotelemetry and Philly-based ERT both run cardiology trials, and Newtown-based BioClinica specializes in applying imaging to trials. But across verticals, there are common needs that can be addressed by a single, unified platform. The race is on to see who can do it best, and based on its track record I wouldn’t bet against Veeva.
Investors told ‘Wait until next year’ for margin gains
Says trade tensions with China affected sales
“What you’re not counting on is how much revenue will come SAP’s way by relying on” cloud partnerships with the likes of Amazon and Google, SAP’s Chief Executive Officer Bill McDermott told analysts during a call. “There’s no reason to think this is slowing down.”