Kathleen Coviello, Chief Economic Transformation Officer at the New Jersey Economic Development Authority – Interview Series

As the global artificial intelligence (AI) market surges—projected to surpass $240 billion this year—Governor Phil Murphy is making early investments to ensure New Jersey is a national leader in the next frontier of innovation. At the helm of this transformation is Kathleen Coviello, the Chief Economic Transformation Officer at the New Jersey Economic Development Authority (NJEDA), whose vision for a smarter, more inclusive innovation economy is taking shape through two powerful new initiatives.

The Next New Jersey Program – AI, a $500 million investment effort, offers performance-based tax credits to businesses that commit to building AI infrastructure and creating at least 100 high-quality jobs in the state. With requirements like $100 million in capital investment and collaborative partnerships with New Jersey-based research institutions, startups, or accelerators, the program is designed to attract world-class AI companies while catalyzing long-term economic growth.

Meanwhile, the AI Innovation Challenge taps into the social potential of AI by allocating $3.8 million in funding to support competitions that generate AI-driven solutions to public challenges. With mentorship, commercialization resources, and community partnerships built into its framework, the initiative underscores New Jersey’s commitment to using AI not just for profit—but for public good.

In this exclusive interview, Coviello shares insights on how these initiatives are reshaping the state’s tech ecosystem, advancing workforce development and positioning New Jersey as a driving force in the future of AI.

The Next New Jersey Program – AI is a $500 million initiative, offering substantial tax credits to businesses investing in AI infrastructure and development. What was the driving vision behind launching this program, and how does it fit into the state’s long-term economic transformation strategy?

The Next New Jersey Program – AI was launched to position New Jersey as a national leader in artificial intelligence by driving investment, job creation and innovation. The program offers up to $500 million in performance-based, transferable tax credits, incentivizing businesses to invest $100 million and create 100 new jobs while fostering partnerships with research institutions.

This initiative aligns with Governor Murphy’s vision for a fairer, more resilient economy focused on long-term growth and cutting-edge industries. By supporting AI development and data centers, the program stimulates productivity and attracts high-tech investment. AI presents a significant economic opportunity, fostering discovery, growing startups, and creating sustainable jobs. Ultimately, the program lays the foundation for a thriving, innovation-driven economy in New Jersey.

The AI Innovation Challenge focuses on AI for public and social good. What types of real-world challenges is NJEDA hoping to see addressed through this initiative, and how do you envision these solutions improving life for New Jersey residents?

The AI Innovation Challenge is designed to harness the power of artificial intelligence to solve pressing real-world problems that impact communities across New Jersey. Through a statewide competition administered by a to-be selected organization, this initiative will empower diverse participants to develop AI-driven solutions that address challenges in areas such as public health, transportation, education, workforce development, climate resilience and more.

By supporting prototypes that advance toward minimum viable products and ultimately commercialization or pilot testing, the AI Innovation Challenge aims to create tangible tools that can improve service delivery, boost government efficiency and promote equity and access for underserved communities. Importantly, the initiative includes mentorship and support from a network of subject matter experts, ensuring participants have the resources needed to turn innovative ideas into scalable solutions.

The NJEDA envisions this program not only as a catalyst for AI innovation but also as a way to democratize the benefits of AI by encouraging broad participation and focusing on social impact. Ultimately, the solutions developed through the AI Innovation Challenge will help make everyday life better for New Jersey residents—creating smarter, more responsive systems that serve the public good.

The Princeton AI Hub, backed by Microsoft, CoreWeave, Princeton University, and the NJEDA, represents a major collaboration. What does this partnership mean for New Jersey's innovation economy, and how will it benefit both researchers and the wider public?

The Princeton AI Hub is a transformative partnership that positions New Jersey as a national leader in artificial intelligence innovation.  Supported with over $72 million in planned investment from Microsoft, CoreWeave, Princeton University and the NJEDA, the AI Hub represents a powerful convergence of government, academia and the private sector. This collaboration will significantly strengthen New Jersey’s innovation economy by accelerating research and development, supporting early-stage AI startups through an AI accelerator, and creating high-quality career opportunities for residents.

For researchers, the AI Hub offers a unique platform for applied AI research in key sectors like life sciences, clean energy, cybersecurity and logistics. It provides access to corporate partners, mentorship and state-of-the-art resources—enabling researchers to move quickly from ideas to real-world applications.

For the public, the benefits will be both immediate and long-term. The AI Hub’s focus on workforce development—including partnerships with community colleges, AI upskilling programs, and apprenticeships—will equip residents with in-demand skills, opening the door to high-paying, sustainable careers. By connecting AI innovation with real-world applications and inclusive economic opportunity, the AI Hub will help ensure New Jersey’s communities are not just witnesses to, but beneficiaries of, the AI revolution.

How do the AI Innovation Challenge and the Next New Jersey Program – AI complement each other in fostering a cohesive AI ecosystem across the state?

Together, these two programs form a powerful, complementary strategy to grow New Jersey’s AI sector. The Next New Jersey Program – AI supports large-scale private investment by offering tax credits to companies building AI infrastructure and creating jobs, encouraging collaboration with local research institutions, New Jersey startups or New Jersey incubators/accelerators. At the same time, the AI Innovation Challenge sparks grassroots innovation by funding a statewide competition to develop AI solutions that address public challenges and promote social good.

While Next NJ scales up industry and infrastructure, the Challenge fuels experimentation, entrepreneurship and public engagement. Both initiatives expand the state’s AI ecosystem—connecting startups, researchers, and major tech players—and ensure broad participation in shaping AI’s future in New Jersey.

With the requirement that businesses invest at least $100 million and create 100 full-time jobs to qualify for the Next NJ Program – AI, how is the state balancing the need for large-scale impact with inclusive, equitable growth opportunities?

The program is structured to ensure that large-scale investments generate broader economic benefits across the state. By requiring participating companies to form partnerships with New Jersey-based universities, startups, or innovation hubs, the program creates direct pathways for local institutions and talent to participate in—and benefit from—the AI economy. These requirements help ensure that investment isn’t siloed but instead drives job creation, workforce development, and technology transfer across a wide range of communities, including those traditionally underrepresented in the tech sector.

Workforce development is clearly a priority. How is NJEDA ensuring that New Jersey residents, including those from underrepresented communities, are equipped to participate in and benefit from the rapidly evolving AI industry?

The NJEDA ensures that workforce development is central to the growth of New Jersey's AI sector by requiring companies in the Next NJ Program – AI to collaborate with local universities, startups, and innovation hubs. These partnerships help create direct pathways for residents from diverse communities to access AI-related opportunities, promoting job creation and technology transfer statewide. By tying large-scale investments to local talent, the program supports both economic growth and inclusive participation in the tech industry.

Additionally, the newly launched NJ AI Hub, developed in collaboration with Princeton University, Microsoft, and CoreWeave, provides a collaborative space for AI research, development, and workforce training. Through partnerships with universities, community colleges, and vocational schools, the AI Hub will equip New Jersey residents with the skills needed to thrive in the AI industry. Initiatives like Microsoft's TechSpark program further strengthen this effort by providing tech training and fostering inclusive economic opportunities across the state.

The Innovation Challenge includes mentorship and commercialization support. Can you share more about how this support will help turn promising ideas into scalable AI solutions?

The AI Innovation Challenge is designed to bridge the gap between breakthrough ideas and real-world impact by offering early-stage funding, expert mentorship and commercialization support to New Jersey-based AI teams. Selected participants will receive guidance from leading academic, industry and government stakeholders to refine their concepts, strengthening go-to-market strategies and preparing for scale. This hands-on support is critical for helping innovators navigate complex technical, regulatory and business hurdles early in the development process.

By connecting startups with experienced mentors and commercialization experts, the Challenge fosters a supportive ecosystem where promising AI solutions can mature into high-growth ventures. This approach not only increases the likelihood of successful technology transfer but also ensures that homegrown innovations can contribute meaningfully to the state’s broader AI economy.

Public-private collaboration seems central to NJEDA’s AI initiatives. How is the Authority fostering meaningful partnerships with the private sector while ensuring community interests remain front and center?

The NJEDA is fostering strong public-private partnerships that align innovation with community impact. At the NJ AI Hub, founding partners like Princeton University, Microsoft, and CoreWeave are advancing research, supporting startups, and building a diverse local talent pipeline. Microsoft’s TechSpark program brings a national model for inclusive tech training to New Jersey. The Next NJ-AI Program also requires companies to partner with in-state universities, startups, or innovation hubs—ensuring that investment circulates through local institutions.

These efforts embed equity and opportunity into the state’s AI growth strategy. Together, they help ensure that community benefit is a core outcome—not a byproduct—of innovation.

With the transferable nature of tax credits under the Next New Jersey Program – AI, how is NJEDA ensuring accountability and transparency in the allocation and use of those credits?

The NJEDA ensures accountability and transparency in the Next New Jersey Program – AI through rigorous eligibility requirements tied to economic and innovation outcomes. To qualify for transferable tax credits, companies must create at least 100 new full-time jobs and make a capital investment of at least $100 million. They must also partner with a New Jersey-based research university, startup, incubator, or similar organization to foster collaboration and knowledge-sharing. These guardrails ensure that only projects with significant public benefit receive the necessary support needed to advance.

The program is designed not only to attract investment, but also to strengthen the state’s innovation ecosystem and workforce. Ongoing oversight by the NJEDA helps ensure that awarded tax credits are used responsibly and deliver long-term economic value.

Looking ahead, what does success look like for these initiatives over the next 3 to 5 years? Are there specific milestones or outcomes the NJEDA is targeting?

Over the next 3 to 5 years, NJEDA aims to position New Jersey as a national leader in AI innovation and investment. Success will be measured by key milestones such as attracting large-scale private investment, creating hundreds of high-quality jobs and advancing a strong pipeline of AI startups with cutting-edge innovation. The NJEDA is targeting meaningful collaborations between industry and research institutions, which are critical for developing scalable technologies. Through initiatives like the Next New Jersey Program – AI and the AI Innovation Challenge, NJEDA also hopes to see more AI solutions piloted, commercialized and deployed to address real-world challenges. Ensuring these programs support inclusive growth and prioritize community benefit is central to the strategy. Overall, success means building a vibrant AI ecosystem that drives long-term economic growth across the state.

Is there anything else you would like to share with the readers?

In late 2023, Governor Murphy established the AI Task Force, charged with studying emerging AI technologies and its societal impacts. The state’s AI initiative draws on New Jersey’s unique strengths in the health, sustainability, financial, and technology sectors, which stand to benefit from the application of AI technologies to advance innovative breakthroughs.

This is just another initiative by which New Jersey’s is harnessing the strength of its public and private sectors to become a national leader in artificial intelligence. Complementing its bold investments like the $500 million Next New Jersey Program – AI and the socially focused AI Innovation Challenge, the state is building a cohesive ecosystem that supports both large-scale infrastructure and community-driven innovation. This is also exemplified by initiatives like the Princeton AI Hub—where government, academia, and industry are accelerating research, workforce development, and real-world applications. Together, these efforts reflect New Jersey’s commitment to shaping an AI economy that is both globally competitive and broadly inclusive.

The NJEDA also  recently announced the AI Innovation Fellows, which is another tool to ensure all New Jerseyans have equitable access to the state’s cutting-edge innovation economy. This program will provide income replacement grants of up to $400,000 to eligible entrepreneur teams looking to launch an AI-driven business.