Money is hard to come by, that’s for sure. And if the funding must comes from the government, it can be very difficult to match a company’s money needs with the right program.
The New Jersey Economic Development Authority, an independent, self-supporting state agency that offers various financing programs, has added two new staff members and is reorganizing to be more flexible and user friendly.
Before, for instance, the EDA published a complicated list of financing programs, and companies were supposed to figure out which could work for them. Now the EDA wants to work more directly with each company, starting with the technology and life science companies. EDA staffers are supposed to channel potential borrowers into programs they need.
It’s like the difference between picking courses from a catalog and meeting with a counselor. Instead of just publishing the catalog, the EDA is offering guidance counselors to help with course selection.
“We used to talk about specific lending programs, but now we are trying to be more general,” says EDA spokesperson Glenn Phillips. “We even revamped our website to remove specific mention of individual programs and, instead, emphasize that we might be able to assist in a number of different areas.”
Another streamlining improvement: Instead of a company having to submit different applications for each program, the EDA will track that company throughout its life cycle.
Technology has traditionally been a major focus of the EDA, and the technology and life sciences sector is the first to see the change. Kathleen Coviello, a former technology lending banker, has been hired for the new position of program manager for science and technology. Reporting to Preston D. Pinkett III, senior vice president, Coviello will coordinate the EDA’s technology assistance programs and manage business development activities with technology companies.
The EDA is not expanding in a big way. For the most part, its 140 employees are being reorganized. But another new job was created for Michael Wiley who, in a new position as Innovation Zone Project Officer, will manage technology neighborhoods in Camden, New/North Brunswick, and Newark.
Coviello has 17 years of banking experience, most recently as a relationship manager with Silicon Valley Bank, where she managed a portfolio of technology companies of various sizes, and for the last eight years she has done her technology lending in New Jersey.
“I am very excited about the opportunity to expand my reach to technology and life sciences companies in New Jersey through my new position at the EDA,” Coviello says. “The EDA has always had a strong commitment to technology and life sciences companies, through every stage of their life cycle. In my new position, I hope to deliver all the historical benefits of the EDA along with some new and creative financing instruments to this entrepreneurial community.”
Coviello says that from her perspective, banks have lowered their level of support for technology firms. “And the EDA is stepping up to help,” she says in a telephone interview, “with a full life cycle approach.”
“The goal is to deploy the EDA’s assets into growing technology companies,” says Coviello. “We will look for direct financing, help with cash management, and/or refer a company to venture capitalists. We will make opportunities to guarantee angel investments, make direct subordinated convertible loans, help locate a company in a technology center, help the company use the tax transfer program, and/or help the company relocate through the Business Employment Incentive Program.”
On the one hand, EDA’s purpose is altruistic – to help job growth and retention. “But also we need to make sure the loans we make are profitable, so we can fund the next great idea.” The EDA is, after all, a self-supporting state agency.
To broadcast this promise to be user friendly, EDA officials are stepping up the speaking schedule. For instance, Coviello and the EDA’s CEO, Caren Franzini, will speak at the Venture Association of New Jersey on Tuesday, September 20.
And at the Technology Center of New Jersey, based in North Brunswick, there will be a kickoff for the Technium Initiative, a full life cycle approach to helping technology companies with everything from real estate to funding and entrepreneurship skills.
Wiley, Collaborator
To manage the state’s three new “technology neighborhoods,” the EDApicked someone with corporate experience in technology licensing. Michael Wiley, the EDA’s new Innovation Zone Project Officer, is supposed to be helping academics and corporate researchers collaborate (E-mail: mwiley@njeda.com or 609-292-0348).
He has had a foot in both camps. After getting his undergraduate degree from West Virginia University, he earned his MBA and his law degree from the same institution. He has done commercial contracting, intellectual property/technology licensing, and business experience for such organizations as Lucent Technologies and Rutgers University’s Office of Corporate Liaison and Technology Transfer. Most recently he worked for the Lucent spinoff, Avaya, as the firm’s primary negotiator for commercial contracts, software licenses, and alliance agreements.
The Innovation Zones have been created in Newark, Camden, and New Brunswick/North Brunswick, and there is some talk about expanding the New/North Brunswick zone to also include Princeton. Wiley will try to coordinate the state agencies to help companies in those zones find financing, improve their infrastructures, and train their workforces.
“Innovation Zones allow us to maximize the value of some of New Jersey’s unique assets, like its strong history of innovation, world-class academic and research institutions, and skilled workforce,” said Wiley in a prepared statement. “At the same time, they encourage collaboration between research institutions and the business community.” These collaborations, he believes, “will help drive New Jersey’s future economy.
Coviello, Banker
Kathleen Coviello made technology loans for 13 years for same boss, but with three different banks.
For eight years she was with Progress Bank, which created a special division, Tech Bank. “When Tech Bank was making a lot of money it was the most profitable group at the bank,” she says. But when the tech bubble began to burst, Pennsylvania’s thrift bank regulators decided that thrift banks should stick to mortgage lending.
So in 2001, when Progress sold off its senior lending group toComerica, Coviello joined Comerica as first vice president. Then in 2003 Comerica made acquisitions in Boston and California, and it closed down her Philadelphia/New Jersey region.
She joined California-based Silicon Valley Bank, which has an office in Radnor, Pennsylvania. From an office in her New Jersey home, Coviello covered the same region as before, starting in the fall of 2003.
Her education includes a B.S. degree with a major in business administration from Albright College in 1988 and an M.B.A. in finance from LaSalle University. She was named Financier of the Year by the New Jersey Technology Council in 2003 and was a member of the NJTC board of directors from 2000 to 2003. In addition to the banks already mentioned, she has also worked at Mellon Bank and Meridian Bank.
Coviello brings all that experience and all those contacts to the EDA,where requests for help will funnel in to her group. “Having a multi-level viewpoint will help me to understand both a company’s ability to repay the EDA’s financing and to look for some potential upside returns as well,” says Coviello. “We are not running programs,” she emphasizes, “we are making referrals.
“We are still finalizing the parameters of the program. We will look to help finance gaps in companies from angel monies to venture fund investment in the form of subordinated debt with a convertible feature and warrants,” says Coviello. Subordinated debt is what gets paid after a senior creditor is paid. Convertible debt can be converted to equity “on a case by case basis,” she says.
“This new way of feeling our clients’ `pain points’ is being rolled out in the life science and technology sectors,” Coviello says. (To be formed later are groups to specifically help the manufacturing and the entertainment sectors.)
Maybe newer entrepreneurs, just getting started, are not ready for any of the services she mentions. They would be referred to theEntrepreneur Training Institute, a boot camp class cycle that will introduce them to finance opportunities.
“We are looking to hire staff as we speak,” says Coviello.
EDA’s Training
The NJEDA has revamped the Entrepreneurial Training Institute classes for new and aspiring small-business owners. Offered by the NJEDA along with the New Jersey Development Authority for Small Businesses, Minorities’ and Women’s Enterprises, these classes teach the basics of entrepreneurship and how to prepare a detailed business plan. Three-hour weekly classes in this area start on Thursday, September 29, at 6 p.m. at the Mercer County Technical School’s Assunpink Campus on Old Trenton Road. Call 609-292-9297.
More than 1,200 individuals have graduated from ETI and accumulated more than $15 million in funding to support their business ideas since the program began in 1992.
The biggest change is that the program has been divided into two parts. ETI I, a six-hour two-week course, costs $145. Students must come to the first class having completed a online self-assessment tool of their personal and financial readiness for starting and owning their own business. During these two weeks the entrepreneurs have the chance to evaluate whether their ideas will work, and they complete a “Business Readiness Roadmap.”
If the going looks good, they sign up for ETI II, “Business Planning,” which is four highly structured three-hour sessions costing $295. Students get coached through writing the formal business plan and have opportunities for peer networking and presentation practice. The Trenton version of ETI II will feature special instruction for nonprofit organizations.
Those who have operated a business for more than one year need only submit a completed Business Readiness Roadmap.
“Members of the instruction team at each ETI location primarily work for local banks and economic development organizations,” said Marion Zajac, program manager for the ETI, in a press release. “This enables students to learn from financing experts while they build relationships with the same people who might ultimately finance their business.”
Graduates of ETI II classroom sessions can submit their business plan to a panel of banking, accounting, law, marketing and economic development professionals. They can also tap the EDA-funded Business Mentoring Program, which provides free post-graduate services through four business development organizations covering the state.
Primary sponsors of the ETI program are Bank of America, Merrill Lynch, PNC Bank and the Wachovia Foundation.
New Jersey Economic Development Authority, 36 West State Street, Box 990, Trenton 08625-0990. Caren S. Franzini, CEO. 609-292-1800; fax, 609-292-5722. E-mail: kcoviello@njeda.com. www.njeda.com
EDA Funding for ATD
Automated Threat Detection, 100 Forrestal Road, Suite E, Princeton 08540. John Romanowich, president. 609-258-8795; fax, 609-258-8794. www.automatedthreatdetection.com
Automated Threat Detection Inc. (ATD) announced during the week of August 15 that, in less than two years, it has raised $1.62 million in early-stage financing from private investors.
One of ATD’s earliest investments was a $250,000 long-term loan by New Jersey Economic Development Authority, a loan that resulted from ATD winning the Springboard II Fund competition.
Founded in October, 2003, by serial entrepreneur John Romanowich, ATD has “intelligent” video surveillance products that it plans to put on the market next year. Some products do surveillance of large, dispersed, or remote outdoor areas, and they could be useful in the transportation, power distribution, law enforcement, petroleum, or natural gas and chemical industries, and also at government facilities (U.S. 1, March 2, 2005).
“The financing committed by our investors is gratifying testimony to the headway Automated Threat Detection has made over the last year,” says Romanowich. “Intelligent video surveillance is a technology that’s still in the early stage of adoption, and it continues to make important market inroads.”
A company can use the ATD system to manage outdoor video surveillance over an IP network from a centralized security command center.
“We are pleased that our funding has supported ATD’s early efforts to commercialize its innovative video technology,” says Caren S. Franzini, CEO of the NJEDA in a press release. “As more and more businesses and government organizations upgrade security in the wake of the 9/ll attack on America, ATD is well positioned to help these enterprises improve surveillance of their large outdoor facilities and protect people and property better.”
EDA Backs Expansion
Creative Business Decisions Inc., 12 Roszel Road, Suite B 200, Princeton 08540. Pat Nanda, president. 609-452-9551; fax, 609-452-0614.
One year after Creative Business Decisions won a long-term loan from the New Jersey Economic Development Authority, it has staffed up to be able to use the money and has expanded into larger space, from 1,750 to 2,000 square feet at 12 Roszel Road.
Creative Business Decisions Inc. has web-based software products for credit and risk scoring models. They can be used by issuers of credit to individuals and businesses.
“It took a while to take all the money, and now we are paying the interest,” says Pat Nanda, the president. “We used it for sales, marketing and software development, and are software is almost complete. In the meantime we generated a large pipeline of leads.”
The five-year loan closed at a fixed interest rate of 3 percent, withinterest only for the first six months. Nanda says the loan comes with a back-end success fee of 15 percent. “If you factor that in, the interest rate is eight percent,” he says.
