Conn. bucks venture capital trend
Like many other technology companies, it wasn’t until etouches Inc.’s first round of venture capital fundraising that the company was really able to take off.
A web-based platform for managing events, Norwalk-based etouches has grown 78 percent in revenue from 2011 to 2012. The platform helps manage every aspect of event management and gives customers effective tools to communicate with their clients. In the past year, the company has grown from 26 to 70 employees and currently has more than 600 customers.
“We’ve been growing at a fast rate since the first round of funding in 2010,” said Leonora Valvo, etouches founder and CEO. “But it was very difficult to get. We went out for funding in 2008 and that was really a hard time economically. In general, venture capital had pretty much dried up.”
Securing seed funding is often the tipping point new businesses need to grow, analysts and entrepreneurs say. And as Connecticut continues to emphasize its entrepreneurial spirit, investments in growing businesses have continued to climb, according to recent reports.
The net value of venture capital investments in Connecticut companies increased by about $1 million, or 0.5 percent, in 2012 compared to 2011, based on the fourth quarter MoneyTree Report compiled by PricewaterhouseCoopers (PwC) L.L.P. and the National Venture Capital Association using data from Thomson Reuters.
In all, about $157.6 million was invested in Connecticut startups through 52 deals in 2012, compared to $156.7 million invested in Connecticut startups through 56 deals in 2011, according to the MoneyTree data.
Valvo said she thinks it might have been easier for the company to find funding or interested investors in New York or California instead of in Connecticut due to historic trends.
But with the most recent MoneyTree Report, Connecticut seems to be at the very least defying national trends in venture capital.
Nationwide, total venture capital dollars invested in startups declined 10 percent in 2012, and the total number of deals fell 6 percent, according to the MoneyTree data. In all, $26.5 billion was invested through nearly 3,700 deals with U.S. companies in 2012.
“Connecticut continues to do a substantial number of deals,” said Owen Davis, a partner at PwC. “The last two years have been at recent highs but the state doesn’t seem to be garnishing as great a number of dollars as we’ve seen historically.”
Fourth quarter results were particularly promising. The fourth quarter of 2012 saw 16 deals that brought $51.6 million in funding to Connecticut startups. In comparison, the fourth quarter of 2011 had 13 deals and less than $17 million in funding — representing a 200 percent year-over-year gain.
The number of deals involving Connecticut startups and the total dollar amount of those deals still haven’t surpassed the levels seen during the dot-com bubble, Davis said.
In total, etouches has secured just more than $10 million in investments from its partners at Greycroft Partners, Connecticut Innovations and Cava Capital through two rounds of fundraising.
The most recent round occurred in August, which Valvo said has put the company on track to continue growing at its current rate. Though she doesn’t expect to add the same amount of employees, Valvo said she expects etouches’ customer base to grow by another 200 to 300 customers by the end of this year.
“(The funding) allows us to upgrade and enhance the solutions we offer in a market that is extremely creative and innovative, in terms of how to get the job done,” Valvo said. “Our goal is to continue to be associated with innovation and quality service.”