Weeks after the state of Connecticut pre-qualified XLerant Inc. for “angel” investor tax credits, the Stamford-based company has raised more than $800,000 in funding ”“ a seeming success for one of the state”™s newest economic development tools.
Founded in 2004, XLerant sells software to help in the corporate budgeting process ”“ for instance, calculating the financial impact of delaying all new hires by three months, or generating alerts when a manager awards a raise that is outside the range of the company”™s normal operating practices. Customers include Norwalk-based EMCOR Group Inc.
In September, XLerant became one of the first Fairfield County companies to qualify for private funding under a new program that allows angel investors to take a tax credit against the funds they sink into startups.
High-tech companies cannot have more than $1 million in revenue to qualify under the program, and investments must amount to at least $100,000 to be considered. Investors can take a tax credit against their income taxes equal to 25 percent of their investment, capped at $250,000.
Other companies pre-qualified to generate tax credits include Axxun Inc. of Stamford, InLineAdz Inc. and SecureRF Corp. of Westport, and New Energy Lighting Technologies L.L.C. of Trumbull. At deadline, none of the four had yet to reveal funding since passing muster for the tax credit program.
Angel investment falls 8.3 percent in past year
Nationally last year, angel investment fell 8.3 percent to $17.6 billion, according to the Center for Venture Research at the University of New Hampshire. Still, the number of startups receiving money increased 3 percent to more than 57,000 in all, amounting to about $300,000 for each angel-backed startup on average.
In its quarterly MoneyTree survey covering Connecticut, PricewaterhouseCoopers tracked just three seed-stage companies receiving funding in the third quarter ”“ for $700,000 in the aggregate ”“ and another three early-stage totaling $3.1 million. PWC publishes the survey in conjunction with the National Venture Capital Association using data from Thomson Reuters Corp.
Those companies included Weston Software Inc., which received a $500,000 investment from Connecticut Innovations Inc., a state-backed venture fund under the oversight of the Connecticut Department of Economic and Community Development. The Westport-based startup provides a single application for information technology administrators to manage nearly 300 separate variants of the UNIX, Linux and Apple MacIntosh operating systems.
15 companies get Q3 funding in state
In Connecticut, 15 companies received some $34 million in funding during the third quarter, as tracked by the MoneyTree report. That compared with 16 deals in the second quarter for nearly $25 million, and year-ago levels of just nine deals for $17 million.
“This indicates a return to more traditional levels of funding in our state,” said Owen Davis, head of PricewaterhouseCoopers”™ private equity practice in Connecticut, in a written statement. “The results are encouraging.”
The biotechnology sector led all Connecticut investments with over $19 million in funding across four deals. In July, Cara Therapeutics Inc. disclosed a $15 million round of funding, as the Shelton-based company develops new pain medications.
The MoneyTree report does not track all equity investments in operating companies, focusing on classic venture capital transactions. The Fairfield County Business Journal”™s own analysis of the third quarter revealed more than $44 million in funding for 15 operating companies in Fairfield County alone, not including other parts of the state.
In addition to Cara Therapeutics, larger deals included Greenwich-based Precyse Technologies Inc. booked $9.5 million, as it develops systems to track objects in warehouses, stores and other environments. And Preferred Brands International Inc. received more than $7 million, as the Stamford-based company sells frozen ethnic dinners under the Tasty Bite label.
