New venture funding brings jobs, businesses, venture capital firms to Connecticut

Connecticut has a new crop of venture capital funding options with an infusion of over $130 million in funding opportunities for the state’s business sector.

The allocation of funds to venture capital investments was the result of a 2010 policy change in Connecticut’s Insurance Reinvestment Tax Credit program. In-state small and medium sized high-growth businesses will be targeted with the new investments.

The IRTC revisions were part of an initiative to bring jobs to Connecticut and may generate as much as $200 million in venture capital investments. The program works by using private capital from insurance companies to invest. All investments are coordinated by state-certified fund managers. Participating insurance companies then receive tax credits in return for their participation.

The IRTC changes require that 25% of all program related investments are made in the green technology sector, and that 3% into very early stage investments called “pre-seed rounds”.

A core focus area for the investment strategy is biotech and medical technology, which is a leading growth sector in Connecticut and around the world.

The program has already attracted several investment funds that have come on board, including Enhanced Capital Connecticut, Advantage Capital Connecticut Partners (under the leadership of Ryan Brennan), Stonehenge Capital Fund Connecticut, and Ironwood Capital. The firms are using IRTC revisions to leverage their funds and diversify investments within the state.

The decision to limit funds to businesses with 250 or fewer employees has brought needed opportunities to start-ups and small businesses in Connecticut, and hopes to attract other businesses looking for a headquarters as they grow. The IRTC reboot is also keeping and attracting venture capital funding sources in the state.

Nation-wide there has been a trend away from funding early-stage and small business ventures. The aim of the IRTC policy changes is to attract innovative businesses and funding opportunities to come to – and stay in – Connecticut, growing the state’s jobs and business sector.