A state fund that has backed more than 100 Connecticut bioscience startups since 2013 is running low on capital — and lawmakers are weighing whether to refill it.
With the Connecticut Bioscience Innovation Fund (CBIF) having already deployed well beyond half of its original capital allocation, lawmakers are considering whether to replenish the state’s primary life sciences investment vehicle.
Senate Bill 31 proposes a $25 million increase in bond authorization for the fund, which has invested nearly $125 million since 2013 and retains roughly $60 million, according to Connecticut Innovations, the state’s quasi-public investment authority that administers the program. The fund is designed to help early-stage bioscience companies bring new technologies to market and expand operations in Connecticut.
Supporters argue additional funding would help sustain investment activity in a sector viewed as a key driver of Connecticut’s innovation economy.
Since it was established in July 2013, the $200 million fund has backed 106 bioscience startups and firms that invest in early-stage companies, according to CI. The agency added that $15 million from the fund was also used for grants during its early years, but that halted in 2016.
Lauren Carmody
“We don’t do grant funding through CBIF anymore,” said Lauren Carmody, CI’s chief marketing officer. “We do only investments.”
Carmody said the program has produced a number of successful investments, citing New Haven-based companies VeraDermics Inc. and Halda Therapeutics as examples.
VeraDermics, which is developing an oral therapy for hair loss and has received an $8.6 million investment from the CBIF, recently had a successful initial public offering, raising $256 million.
Halda Therapeutics, which received a nearly $2.5 million investment from the fund, was acquired last year by Johnson & Johnson for $3 billion.
“These investments have demonstrated the significant impact our funding can provide, especially at an early stage,” Carmody said, adding that any returns on CBIF investments are placed back in the fund.
More funding
Senate Bill 31 was introduced in February by Sen. Tony Hwang (R-Fairfield). The measure was raised by the Commerce Committee and later referred to the Finance, Revenue and Bonding Committee, where Hwang serves as a member.
Hwang did not respond to several requests for comment about the bill, including why he is serving as its primary sponsor. The bioscience sector does have a measurable presence in his district: Of the 106 firms that have received investments from the fund, 16 are located in Fairfield County.
Carmody said additional capital would help Connecticut Innovations maintain its pace of investments.
“To continue investing in the vital sector of bioscience companies, we would greatly benefit from the legislative support of an additional $25 million,” she said.
Growth Industry
Connecticut’s bioscience sector is widely viewed by economic development officials as a strategic growth industry.
According to the Connecticut Business & Industry Association, the state’s life sciences “ecosystem” includes more than 1,500 companies employing over 25,000 people, supported in part by research institutions such as Yale University and the University of Connecticut.
Of the 106 firms that have received investments from the bioscience fund, 89 are based in Connecticut. The fund has supported companies across seven of the state’s eight counties, including 51 in New Haven County and 15 in Hartford County.
Thirty-six of the funded firms are located in the city of New Haven.
The remaining companies that received investments — including several financial firms that invest in bioscience startups — are based outside Connecticut but agreed to invest in or establish a presence in the state, Carmody said.
She added that some of the companies that received investments later failed, which is one of the risks of investing in bioscience startups.
As the fund’s portfolio grows and lawmakers weigh additional borrowing authority, Connecticut Innovations’ oversight practices have drawn scrutiny. A recent state audit covering fiscal years 2023 and 2024 found CI did not sufficiently monitor whether companies receiving financial assistance were complying with job-retention and Connecticut presence requirements tied to their funding agreements.
CI agreed with the findings and said it would expand its use of independent employment verification.
‘Major contributor’
Jodie Gillon, president and CEO of BioCT, a trade group that represents the state’s life sciences industry, says the legislature needs to continue its support for the sector.
Jodie Gillon
“The Connecticut bioscience sector is a major contributor to Connecticut’s GDP, as well as to its highly skilled workforce,” she said.
The state can continue to emerge “as a global leader” if the legislature provides “favorable policies and incentives” to mitigate federal funding headwinds and competitive pressures from neighboring states, Gillon said.
Proposals like Senate Bill 31, she added “are an important tool in a broader toolkit to ensure that we are making investments in this state to catalyze this sector — a sector that brings innovation to patients around the world.”
The remaining companies that received investments — including several financial firms that invest in bioscience startups — are based outside Connecticut but agreed to invest in or establish a presence in the state, Carmody said.
She added that some of the companies that received investments later failed, which is one of the risks of investing in bioscience startups.
As the fund’s portfolio grows and lawmakers weigh additional borrowing authority, Connecticut Innovations’ oversight practices have drawn scrutiny. A recent state audit covering fiscal years 2023 and 2024 found CI did not sufficiently monitor whether companies receiving financial assistance were complying with job-retention and Connecticut presence requirements tied to their funding agreements.
CI agreed with the findings and said it would expand its use of independent employment verification.
