Conn. development agency credits venture capital firm’s investments for jobs, economic boost

By Stephen Singer, AP
Thursday, January 21, 2010

State: Venture capital firm boosts Conn.’s economy

HARTFORD, Conn. — Connecticut’s economic development agency said Thursday that investments by the state’s quasi-public venture capital firm in high-technology businesses has helped boost the state’s economy, even in two downturns.

The Department of Economic and Community Development said Connecticut Innovations Inc. created an average of 1,610 jobs a year from 1995 through 2008. That included the recessions of 2001 and the current downturn that began in December 2007.

In addition, state economists say venture capital investments generated net state revenue of $209 million, which includes taxes paid by businesses and individuals and accounts for increased spending for state services.

The agency also says investments by Connecticut Innovations, established by the legislature in 1989, drew $1 billion in investments from its partners during the 14 years.

Rocky Hill-based Connecticut Innovations has invested $152 million in a portfolio of 84 companies. Of that, $106 million was from state bond money and the remainder was earned in returns on investments.

Investments were in companies in bioscience, information technology, energy, environmental systems and other research and development.

The study looked at data beginning six years after Connecticut Innovations was founded because it took that long for the venture capital firm to become self-sufficient, said Joan McDonald, commissioner of the Department of Economic and Community Development and chairwoman of Connecticut Innovations.

Dan Berglund, president and chief executive officer of the State Science and Technology Institute, a Westerville, Ohio, association and resource center for science- and technology-based economic development, said economic downturns spurred more investment in the recessions of 1981-82, 1990-91 and 2001.

“Our expectation is there will be another wave as a result of this recession,” Berglund said.

He said he also expects venture capital programs to pick up speed next year as new governors take office and begin “looking for solutions” to their states’ slow job growth and weak economies.

Investments by Connecticut Innovations more than doubled in 2000, to $29.8 million, but pulled back nearly 21 percent in 2001 as the recession took hold. However, investments jumped from $1.5 million in 2006 to $6.5 million in 2007 and increased another 15 percent last year.

Peter Longo, president of Connecticut Innovations, said the venture capital firm invests in companies that take five to 10 years to grow in size and value.

“We take a long view of things,” he said.

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