Venture Capital Invests in Connecticut

Connecticut’s venture capital sector is being revitalized by three new funds which plan to make more than $130 million available to high-growth companies. In 2010 state lawmakers passed the revised Insurance Reinvestment Tax Credit program which offers credits for insurance companies that buy into high-growth businesses through state-registered fund managers. The new funds are only available if the businesses employ fewer than 250 workers, and the majority of the workers are residents of Connecticut. This is a welcome announcement as the business sector in the state has lacked a robust early stage investment base.
Several new funds are already investing in the state, drawn to the market by the increase in tax incentives. Enhanced Capital Connecticut, managed by Liddy Karter, has already raised about $30 million for investment in qualified firms. The fund is planning on underwriting debt and equity investments in industries such as manufacturing, information technology, and healthcare, as well as green technology and business services. Their latest deal was recently finalized with New Haven-based software analytics firm Hadapt Inc.
Ryan Brennan of Advantage Capital Connecticut Partners, a partnership between Missouri-based Advantage Capital Partners, Ironwood Capital in Avon, and Stonehenge Capital Fund Connecticut, has raised $107 million to invest in Connecticut. Eight Connecticut companies have already been invested in by Advantage Capital and Ironwood Capital. Recent deals include XLerant, Inc. in Norwalk, which is a software company, and The Green Life Guides LLC in New Haven, which operates The Green Bride Guide, an online site for environmentally friendly wedding plans, products, and services.
There has always existed a concern in the industry about the lack of an early stage investor base in Connecticut, however, in 2010 about $225 million was invested in Connecticut companies, a 43 percent increase from 2009. While the new funds may not be able to meet Connecticut’s need for venture capital entirely, they will provide a much-needed boost to first stage companies seeking their first large investment.