Newark has long been an important economic and industrial hub for the state of New Jersey and the entire New York metropolitan area. Port Newark-Elizabeth is the primary container-shipping terminal for the Port of New York and New Jersey, which is the most highly trafficked seaport on the East Coast, and Newark Liberty International Airport is one of the busiest airports in the country. It’s no wonder, then, that Newark has been nicknamed the “Gateway City.”
While the city underwent a slow urban and economic decline since its peak in the ’50s and ’60s, the turn of the century and the digital and Internet revolution have provided Newark with an opportunity to build a vibrant entrepreneurial ecosystem and new economy — one that may not look anything like the city’s industrial past but one that holds equal promise.
As a result, Newark is being revitalized by technology-focused companies. Several large, established companies have migrated to Newark in search of more affordable office real estate and a lower cost of doing business.
In 2013, for instance, electronics manufacturer Panasonic relocated its American headquarters to downtown Newark, a block away from the city’s Penn Station, to take advantage of a tax incentive package for companies located near mass transit. Panasonic received up to $102.4 million in tax breaks from the New Jersey Economic Development Authority’s Urban Transit Hub tax credit program, which also required the firm to bring 250 new jobs to the city by the end of 2016.
Amazon subsidiary Audible, which moved to downtown Newark much earlier, in 2007, initially brought 127 jobs to the city, but that number has since grown to 800. More importantly, however, the company is now investing its own resources to create a more fertile ground for tech-minded startups to launch and thrive in Newark.
In 2014, the New York City metro area attracted a near-record $5 billion in venture funding—and while most of that undoubtedly went to startups in New York, Newark is only 20 minutes away by train and its real estate is much, much cheaper. For fledgling businesses that can’t afford Manhattan or Brooklyn, Newark may one day be the answer.
Earlier this year, Audible CEO Don Katz founded Newark Venture Partners (NVP), a venture capital fund focused on allocating $50 million in seed and Series A funding to Gateway City companies over the course of five years, with help from Dun & Bradstreet, Prudential Financial, and multiple veteran angel investors such as Thomas Wisniewski.
For Katz, the benefits for businesses looking to make the jump across the Hudson River are clear: “The cost of our space is a fraction of what it would cost in Manhattan,” he told Next City.
But make no mistake: Newark is not a small town. Its distinctly urban feel means that startups based there get a realistic “test tube environment” in which to test their services and products.
After opening a 25,000-square foot accelerator workspace in downtown Newark – complete with Internet service that runs at 10 gigabits per second, 20 times faster than average – in the first quarter of 2016, NVP closed $23 million in investment funding in May. In September, the firm announced the launch of its first NVP Labs Accelerator, with an inaugural class of nine companies.
The objective of the program, which runs from September to November, is to enable participating firms to build and scale their businesses, with full access to Audible’s system engineers and architects, data scientists, and business experts, all of whom will be located in the same building, along with mentors from the Rutgers University Business School. Startups also receive an $80,000 investment in exchange for a 5 percent equity stake.
This year’s class casts a wide net across multiple startups looking to use technology to disrupt many different industries. This includes startups such as Barkly, an on-demand dog walking app that connects owners to vetted walkers; Navinata Health, which uses technology and data to create a quick and reliable system that educates busy physicians about life-saving and life-extending techniques and therapies; and Dream Forward, which helps sell 401(k) plans with a unique technology designed to help employees understand and navigate the often-confusing process of saving for retirement.
Newark Venture Partners has received commendations from New Jersey officials such as Newark Mayor Ras Baraka, former Newark Mayor and now U.S. Senator Cory Booker, and Lieutenant Governor Kim Guadagno.
Naturally, New York City’s technology and startup ecosystem, sometimes dubbed Silicon Alley, will continue to garner more of the spotlight from investors and entrepreneurs around the country. However, in its shadow, the new Gateway City is quietly building a digital economy that may one day rival its neighbor in Manhattan.