By Paul Schott Connecticut Post, Bridgeport
WWR Article Summary (tl;dr) Janis Collins, who runs "The Refinery", an accelerator program for women-led businesses in Connecticut, moderates a panel discussion focused on lending for startups.
Connecticut Post, Bridgeport
The business experts on the panel convened Thursday at the University of Connecticut's Stamford campus underscored a critical financing principle for entrepreneurs: A great idea alone will not get your business funded.
"Before you go to a bank, before you go to see an angel investor or venture capitalist, they want to see there's something to this idea, that you have some investment and stake in the game," said David Menard, a partner in the law firm Murtha Cullina, which has offices in Stamford. "The further that you can get your company on your own, the better the terms you're going to get with any major investor."
Menard and the four other panelists gathered for a discussion, sponsored by the UConn Innovation and Entrepreneurship Consortium and Murtha Cullina, focusing on access to capital and growth for new businesses. They brought different areas of expertise, encompassing legal counsel, banking, family-office investment, small-business counseling and workforce development.
Bank lending remains a cornerstone of financing for many new businesses. But banks are discerning and conservative in their lending practices, said Steve Ferguson, assistant vice president and business development officer at First County Bank in Stamford.
"We let them know what to expect and then to break down a plan -- what are their expenses, what's their break-even point and how are they showing profits," Ferguson said. "These are outlines to their business plans. But a lot of people don't know what cash flow is."
New forms of financing are emerging. Menard discussed the impact of equity-based crowdfunding, a new platform launched nationwide in May that allows companies to issue shares through online portals. Some $4.4 million has been raised so far through such sites, according to Menard.
"It's not a lot of money that's gone through this yet, but the predicted market is over $5 billion in the next five to six years in the U.S. alone," Menard said. "This is something that people in my industry are watching very carefully."
Tony Peters, another of the panelists, is a business consultant at the Connecticut Small Business Development Center at UConn-Stamford. The SBDCs in the state are funded by the state Department of Economic and Community Development and the federal Small Business Administration. They do not lend to startups, but they help to connect new businesses with prospective funding sources.
"Our role is to take businesses that have gotten to the point where they're ready to grow and to make them grow faster, to smooth that glide path for them," Peters said. "At the end of the day, the way we get judged and evaluated is by how many jobs we've helped to create in the state of Connecticut."
Entrepreneurs also have to understand which types of firms are realistic candidates for investing in their companies.
Panelist Stuart Adam is president and CEO of the West Palm Beach, Fla.-based family office Adam and Partners, a firm that generally makes $5 million to $20 million investments in established companies.
"We take old industrial companies with a modern outlook, and we basically help them transition to a modern product," Adam said.
Janis Collins, who runs The Refinery, an accelerator program for women-led businesses in Connecticut, moderated the panel's discussion.
"We really are focused on bridging the funding gap for women-led companies and really focused on helping those companies scale and grow big," Collins said.
Many of the several dozen attendees said that they learned a lot from listening to the panelists.
"They were thorough -- talking about everything from the SBA to private equity," said Satvinder Mayall, a professor in the UConn School of Business in Storrs. "I mentor a lot of people, so their insights were very helpful."