If Zadspace Inc.”™s relocation to Norwalk last year amounted to a footnote in Connecticut”™s economic development record ”“ what with Cigna and NBC Sports taking “First Five” incentives to move their headquarters to the county ”“ the president of Connecticut Innovations thinks the startup is illustrative of what could come next.
As it pursues a business selling advertisements on shipping labels, Zadspace ”“ in packing its bags to come here ”“ may as may as well have stamped an ad on Connecticut as a startup destination.
The question becomes how many more will follow in the coming years. Under Peter Longo, Connecticut Innovations is leading an effort to get more startups to move to Connecticut, copping the “First Five” terminology Gov. Dannel P. Malloy used to lure Cigna Corp., ESPN Inc., NBC Sports Group and TicketNetwork Inc. to expand.
Connecticut Innovations is focusing a new, $250 million budget over five years on drawing startups to Connecticut from other states.
“We haven”™t been as bold about it, but over the past few years we”™ve certainly been successful in recruiting 15 to 20 companies to Connecticut,” Longo said.
Besides Zadspace, which moved from California to Norwalk, those companies have included RemoteReality Corp. and AdhereTx Corp., which both moved from Massachusetts.
In addition to freeing up funding for a second “First Five” program for companies that add at least 200 jobs in the state ”“ and borrowing the program”™s title for a brownfield remediation effort ”“ Malloy included as part of his recent jobs bill $125 million in new funding, to help Connecticut Innovations entice high-tech startups.
“Connecticut Innovations has a proven ability to accurately assess the needs of entrepreneurs and to respond to those needs with programs that reflect today”™s economic challenges and opportunities,” Malloy said in a statement. “Providing more funding will allow the organization to accelerate its success in creating jobs and growing Connecticut”™s economy.”
The annual funding over five years includes:
Ӣ $4 million for CIӪs pre-seed program, which offers loans to support the formation of new Connecticut technology companies;
Ӣ $22 million for seed-stage and first-round investments and for follow-on investments in CI portfolio companies;
Ӣ $6.5 million for a new loan program to provide growth and working capital for technology companies;
Ӣ $7 million to recruit emerging technology companies from other states or countries;
Ӣ $4 million to help Connecticut companies capture more federal Small Business Innovation Research (SBIR) funding; and
Ӣ $4.8 million per year to establish a trio of technology business accelerator hubs, while launch a university-based proof-of-concept center and a corporate technology transfer initiative.
In the past three years, CI credits its investments with helping leverage $74 million in additional private sector capital investments for Connecticut companies. CI estimates its investments add, on average, 1,600 jobs in Connecticut each year.
More critical going forward may be the state”™s nascent angel investor tax credit, for which Malloy”™s jobs bill lowered the minimum investment threshold to $25,000, from $100,000 in the program”™s initial year. More than 15 Fairfield County startups have been pre-qualified to generate tax credits for their investors under the program.
“The (venture capital) environment is definitely better now than it was two or three years ago,” Longo said. “The market has loosened up a bit. With that said, there”™s still a level of success that the venture guys are looking at before committing capital.”
