State Gives Businesses A Leg Up

By Lee Howard
The Day, New London, Conn.

So you’ve got a brilliant business idea but no money and little expertise in running a startup. What are you going to do?

You could try maxing out your credit cards, but if you’re like most people these days there isn’t much credit to be had.

You could reach out to your rich uncle, but there’s a good chance he would tell you to take a hike, and that’s never good for family relations.

And then there is a slightly more complicated option that nevertheless could be the best ticket to startup cash and instant advisers: state government. And, according to a seminar held last month at the Cell and Genome Sciences building that houses the University of Connecticut’s Technology Incubation Program in Farmington, millions of dollars are up for grabs if you know the right agencies to tap.

“There’s a ton of money available,” said Jessica Dodge, senior program associate for Connecticut Innovations and manager of its CTNext program that helps foster up-and-coming companies.

A good deal of that money comes from federal grants, and CI stands ready to help state businesses build teams to develop complex projects that can garner national attention and will even help with the often-complex forms required to get the millions of dollars in aid available.

“The goal for us is to make sure those dollars land here in Connecticut,” Dodge said.

On a statewide level, CTNext’s Entrepreneur Innovation Awards, quarterly events likened to the popular “Shark Tank” television show, hand out up to $10,000 for innovative projects being proposed by state companies.

“It is a pretty cool program,” Dodge said. “We liken them to the Grammys.”

So far, $654,000 has been given out to 79 companies over the last few years through the competitive awards program. The money can be used for a wide variety of purposes in the hopes that companies feeding into the Connecticut Innovations pipeline will eventually develop successful new enterprises.

“And you don’t have to be a tech company,” Dodge said.

Other, less flamboyant CI programs include the Eli Whitney Equity Fund that provides companies up to $1.5 million in funding in return for a stake in the firm; the Seed Investment Fund, which can invest up to $1 million in companies focusing on biotech, information technology, advanced materials and clean tech, and the Venture & Mezzanine Fund that can scale a business with up to $2 million in capital investments.

A Pre-Seed Fund for new technology companies offers up to $150,000 for early-stage companies, but the money must be at least matched by private investments.

The amount of money made available — or whether any funding will be provided at all — is determined on a case-by-case basis, said Mike Wisniewski, CI investment adviser. He added that the state likes to deal with people who are happy to take advice, are working on a technology that is manageable and are in a field with large and growing markets.

“We look for a solid management team,” he said. “It’s almost like a marriage. Early on there are going to be a lot of ups and downs.”

Wisniewski said CI also likes companies that have already attracted outside capital.

“It’s a validation point for us,” he said.

But Wisniewski said CI also has experts on staff who can help out in such areas as public relations and marketing. It helps entrepreneurs hook up with potential venture partners as well, he said, and can allow startups easier access to student interns.

“CI is more than money,” he said.

But when CI does offer money, the agency wants to support companies that are likely to create a return on the state’s investment as well as create jobs in Connecticut, Wisniewski said.

In fact, jobs was the key word among all agencies represented at the seminar. Many of the statewide business incentive programs were instituted in the 2011 jobs bill passed by a united General Assembly and signed into law by Gov. Dannel P. Malloy with the hopes of boosting Connecticut employment.

The Small Business Express Program, managed by the state Department of Economic and Community Development, is one of the measures to come out of the bipartisan jobs bill. So far, the program has helped about 1,300 small businesses and handed out $198 million in loans and grants.

Sheila Hummel, community development manager at DECD, said another $50 million is expected to be approved this year for Small Business Express, which makes money available to firms with fewer than 100 employees that have been in business for at least a year and are current on all state, federal and local taxes.

Matching grants of $10,000 to $100,000 are available depending on how many jobs will be created and how much those positions will pay, Hummel said.

“There’s a big difference between a $75,000 job and a $25,000 job,” she said.

The program also offers job-creation loans of up to $300,000 and a revolving-loan fund of up to $100,000 that can help struggling existing businesses retain jobs.

“We try to work with the client to get to a ‘yes,'” Hummel said. “It’s been a great program. We’ve helped a lot of companies.”

Casey Pickett, director of innovation at DECD, said the agency is hoping to help more startups through Small Business Express, but working out deals has been difficult without current revenues, assets or, in some cases, even working prototypes. DECD Commissioner Catherine Smith is exploring various ideas to help with startup capital, he said, in hopes of growing more businesses in Connecticut.

Tammy Warner, a business adviser at the Connecticut Small Business Development Center, said her programs are constantly evolving to help clients succeed.

“I don’t have buckets of money; I have buckets of advisers,” she said.

The agency works with about a dozen advisers who can offer expertise in areas ranging from agriculture to financial analysis to marketing to angel investing. And while it doesn’t provide money directly, SBDC can hook up clients with the right type of investors for their business, she said.

SBDC, which has offices in Waterford and Groton, also uses a variety of computer applications to analyze the bankability of a project, evaluate the personalities of a business team and flag financial pitfalls that can stand in the way of success.

Businesses also can test their pitch with SBDC experts before seeking money from venture capitalists to get feedback on how they can improve their presentations in front of potential investors.

“You want people to be ready,” Warner said.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

To Top