In Part I of my blog post “Getting Connecticut Back To Work”, I recommend increasing access to venture capital and angel financing as a way to support CT’s growth and job creation in the tech space.
Another strategy to encourage state growth is to stimulate and develop new funds or entities and other sources of capital financing.
One option is to cultivate the number of private and public sources of capital, in addition to the work done by Connecticut Innovations (CI). CEOs of major Connecticut companies could be encouraged to allocate funds, either directly by such companies or by their pension funds, to one or more new Connecticut venture funds. This can be coupled with tax incentives or credits, not unlike the existing Insurance Tax Credit program. An important part of the message is that all stakeholders in Connecticut must work to reinvigorate the state’s economy, thereby enhancing the overall entrepreneurial environment. Connecticut businesses, be they multinational or local, should support this effort. In addition, it is time to start encouraging the pension funds to think CT first. While these funds have private equity allocations and even some later stage venture, a very small amount is actually in CT based early stage venture; the point at which many growth businesses are being created. The growth of venture and other sources of capital will compliment the efforts of CI directly.
Another option is to create a state SBA program similar in scope to the federal level program with matching funds for state allocated investments. Matching at 1:1 or 2:1 is acceptable. The federal program has been successful in the past and has created several new firms in the process. At Cava, we are on the ground, finding great companies and working with their management teams to execute their vision. A state program could be very effective in drawing funds to the area, enticing more companies to build their futures here with the increased access to capital.