When you think about the ideal location to launch a technology startup, Connecticut may not immediately make your short list, but it’s a comer.
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When you think about the ideal location to launch a technology startup, Connecticut may not immediately make your short list, but it's a comer.
Analysis just released by PitchBook Data Inc. points to resources, talent and density of entrepreneurs as three key indicators of a well-developed VC ecosystem and Connecticut has impressive scores in those categories.
The state ranked fourth nationwide in local capital per venture-backed startup — $3.6 million in 2017. The data also show a healthy presence of experienced entrepreneurs (tied for 13th place) and a high density per population of companies across all stages of financing — ranked ninth in both early stage and late-stage density and 12th in very early stage density.
And while the cost of labor may be relatively high (14th), this is what it takes to attract the graduates of the state's top-tier universities. Housing is also comparatively expensive (sixth), but it goes hand in hand with a quality of living that is typically rated in the top five in the U.S., with meccas like Greenwich, Stamford and West Hartford.
Another draw for Connecticut is the potential talent within its sizable immigrant population (seventh largest nationwide). As noted in the PitchBook analysis, the Kauffman Foundation has research to suggest that “immigrants have a high propensity for entrepreneurship” and according to the National Venture Capital Association, “as of September 2017, 51% of unicorns [startups valued at more than $1 billion] were founded by immigrants.”
Further, according to BEA International, in 2017 foreign investors tripled the amount they spent establishing, expanding or acquiring businesses in Connecticut to $13.5 billion, trailing only Massachusetts in the eastern United States. That figure is even more impressive when you consider that foreign investment in American businesses as a whole dropped 32 percent over the same time period.
Connecticut may be under the VC radar, but it's increasingly poised to give places like Silicon Valley and Boston a run for the money.
Matthew McCooe is the CEO of Connecticut Innovations, the state's quasi-public venture capital investor.
