Q&A talks about growth strategies with Peter V. Longo, president and executive director, Connecticut Innovations.
Q: In an announcement about its annual report, Connecticut Innovations “focused largely on sowing seeds with new investments and building a foundation for future growth.” What are some examples of this?
A: Of the 25 companies CI funded during the fiscal year, 13 were new to the CI portfolio. Bringing new companies into the portfolio provides opportunities for CI to leverage its investments by attracting private capital into the mix as each company grows and seeks additional rounds of financing. New companies also lay the groundwork for future job growth, which is an important component of what CI looks for when evaluating an investment opportunity. In a recent Kauffman Foundation research paper, it was stated that startup companies account for almost all net job growth. With this in mind, the role that CI plays it is extremely important for the future of Connecticut.
Q: For your fiscal year, you had a record number of companies new to CI’s portfolio. What are some industries CI is branching into to expand its portfolio and why?
A: CI focuses on those technologies for which the state has strong core competencies and potential for growth. That being said, CI does not limit itself to any particular set of technologies. Most recently, clean technologies — technologies that conserve energy and resources, protect the environment and eliminate harmful waste — are very strong. To meet the needs of this sector, CI partnered with the Connecticut Clean Energy Fund and the Department of Economic and Community Development to create a $9 million investment fund. This space is very active.
Q: Explain the CTech technology business incubators. What is the philosophy behind them and how long does it take an investment in them to pay off, if ever?
A: CI launched its first CTech technology business incubator in 2008 to fill a real need that the technology community has long expressed. CTech serves several purposes — it provides affordable space for tech startups with very limited capital, it creates a vibrant community through which entrepreneurs can share ideas and it provides access to business expertise that startups rely on but often can’t afford. Research has shown that “incubated” companies have a higher survival rate than other small business startups. By incubating companies, CI is helping prepare them for future growth.
Q: You have touted CI’s investment in a second company around technology developed at the University of Virginia. What is that technology and what does it mean for Connecticut?
A: EpiEp, Inc. developed a novel access system for the minimally invasive treatment of certain cardiac conditions or arrhythmias in which there is abnormal electric activity in the heart. The CEO of EpiEp lived in South Carolina and was out looking to raise capital. Through a series of conversations with the CEO, the CEO decided to move the business to Connecticut and we invested in the business with LaunchCapital. As this company grows, they will be adding much needed jobs for Connecticut.
Q: How did the Jobs Bill signed into law by Governor Rell help Connecticut Innovations? What changes will be evident going forward?
A: The Jobs Bill provided two new opportunities for CI — the Pre-Seed Fund and the Angel Investor Tax Credit. We launched the Angel Investor Tax Credit Program July 1. Under this program, angel investors can earn a 25 percent credit on their Connecticut state income tax by investing in a qualified technology startup company. This is important because it creates new opportunities for startups to raise capital and it helps deploy more capital in the state of Connecticut. In September, CI launched its new Pre-Seed Fund. The Jobs Bill provided CI with $5 million to support the development of proof of concepts, support services and business assistance, which will lead to the acceleration of growth for these companies. This fund targets companies at their very earliest stages of development.
Q: Your annual report promotes how five of the 25 companies CI invested in had female CEOs or presidents. Why is the gender of leadership important to CI’s investments?
A: Female leaders set a good example for the younger generation of women by demonstrating that it doesn’t matter what your gender is, you can pursue your dream and achieve success through hard work. It also reminds young women that science and technology can be fun, cool and exciting and provide opportunities for leadership not found elsewhere. Female CEOs often are terrific role models and good mentors. For young women thinking of starting their own company, being able to seek advice from another woman can be highly beneficial.
