Nine Connecticut Technology Companies (Six in New Haven Region) Receive Venture Capital in 4Q 2010; Concerns Over Continued Growth
Posted by admin on Jan 31, 2011
The Hartford Courant recently covered venture capital financing deals for technology companies in Connecticut, as studied by the industry-benchmarking MoneyTree Report. Overall, there were 52 venture capital deals in 2010 in the state, with $187 million invested — a fairly large increase over the 39 deals worth $157 million in 2009. For comparison, Oklahoma, which has a similar population to Connecticut, had less than 1/10th that amount of activity.
The MoneyTree Report is a quarterly study of venture capital investment activity in the United States, conducted by PricewaterhouseCoopers and the National Venture Capital Association based upon data from Thomson Reuters. Historical data may be accessed on the website at this link. Following national trends, the number of financing deals within Connecticut has declined from over 100 during the “tech bubble” of 2000, back to historical levels of around 30-50 per year.
The 9 Fourth Quarter 2010 deals mentioned by the report, which included five in City of New Haven (some at Science Park, pictured here) and one in nearby Guilford, were:
- + $6.1 million, VLS Securities LLC, Canaan: Start-up broker-dealer.
- + $2.5 million, Helix Therapeutics LLC, New Haven: Biopharmaceutical company.
- + $1.3 million, SeeClickFix Inc., New Haven: Developer of online and mobile platforms.
- + $1.2 million, Affinimark Technologies Inc., New Haven: Developer of medical diagnostic products.
- + $453,000, uKnow Corp., Guilford: Advertising optimization.
- + $275,000, Interactive Mobile @dvertising LLC, Norwalk: Advertising.
- + $250,000, Retail Optimization Inc., New Haven: Merchandising software and analytics.
- + $250,000, Twigtek Inc. (YouRenew), New Haven: Website for selling or recycling used electronic equipment.
- + $50,000, Semantifi Inc., Stamford: Software.
Connecticut also continued to score highly in the 2010 Milken Institute’s State Technology and Science Index, though it slipped from 7th place to 9th place this year. The Courant covers that story here. Perhaps as one illustration of the potential impact of strong conditions for technology growth, Massachusetts, which has scored 1st place every year since the Milken Institute’s Index was first published in 2002, has seen a job growth rate more than double that of Connecticut’s over the past few months, according to a Courant feature by Mara Lee, entitled “Massachusetts Magnet: Bay State Outdoes Connecticut As Job Magnet In Recovery”. A few of the community indicators selected by Lee to help highlight this story:
- + “From January to November 2010, Massachusetts employers added 38,300 jobs, an increase of 1.2 percent, and unemployment dropped to 8.2 percent from 9.5 percent. That was the state’s best job growth in more than 10 years.”
- + “In Connecticut during those 11 months, the jobs increase was less than one-half of 1 percent, and the jobless rate was the same in November as when the year began: 9 percent.” (Connecticut mirrors the nation’s poor job creation in these figures).
- + “Starting in 2009, Massachusetts reversed its long trend of losing population to other states.”
- + “Payroll withholding tax collection was up by more than 7 percent in the first half of 2010 according to a report for the Kitty & Michael Dukakis Center for Urban & Regional Policy at Northeastern — a sign that the new jobs are good ones.”
Economists point out that Massachusetts’s job growth is closely tied to large health care, education and technology sectors, as well as its largest city’s appeal to young singles:
“Boston-area colleges grant the highest number of bachelor’s degrees each year of any metro area in the country. About 375,000 students attend college and graduate schools in greater Boston. The result: Each year, the city gains more recent college graduates than it loses. Boston-area graduates who grew up in Maine, Connecticut, Georgia, New York, India, China, Scotland and other places find jobs in Massachusetts at companies like Novartis, Microsoft, Google, Cisco Systems, Forrester Research or Shire Pharmaceuticals, or at a home-grown company like Akamai Technologies, founded by MIT professors. Part of the reason, the Dukakis Center report said, is that Boston-area colleges have strong ties to the tech community.
“This is sort of a self-reinforcing trend, areas that have a lot of college graduates also tend to attract migrating college graduates,” said Clayton-Matthews, the Northeastern University economist. “For young professionals, Boston is kind of a fun city to be in. Does Connecticut have a city like that?”
“Connecticut, in fact, does not have a city with the kind of nightlife, professional sports, boutique shopping and sidewalks full of pedestrians that Boston and Cambridge have, though New Haven and Greenwich both have one or two of those elements. While Hartford-area high school graduates have been landing in Boston after college for decades, the differing rates of recovery makes that even more likely now.”
Related to this, the Connecticut Technology Council recently released a related report that attempts to explain why Connecticut risks losing its highest-growth technology firms. The Council conducted interviews with numerous business leaders within the sector. The report can be found here. An excerpt from their report states:
“Recent data from the Census Bureau shows that 40% of net job creation comes from the fastest growing 1% of firms in the U.S. In fact, the vast majority of new jobs are created by a small number of very fast-growing firms….
“In addition to lively downtowns and fast transportation to attract young talent, global customers and savvy investors, the CEOs said they want a governor who is as entrepreneurial and resourceful as they are. Even those who say they need no assistance, expect the state to constantly build resources and institutions to make the regional environment more supportive of innovation and growth….
“The areas they wanted addressed included: a lack of helpful networks to connect people in the tech world across the state and region; difficulty finding talented young workers outside Stamford and New Haven; a need for more early stage investment programs from state sources and more support for research links to the state’s universities.”
Though Connecticut may have much to gain by studying the successes of Massachusetts, the portions of our state that appeal to talented college graduates and have close connections to the innovation of major universities will continue to be well-positioned for future job creation in the technology sector. Because new firms attract large amounts of capital and can create many new jobs, improving the conditions necessary for startup companies and their workers may help spread technology-related growth to other parts of the state beyond the Stamford and New Haven areas.
In addition to looking at some of the data mentioned here, DataHaven has been developing community technology indicators similar to those used by the Boston Indicators Project. These include measures of technology-related jobs, scientific research and development, internet access, technology use by nonprofits, and the number of science and engineering graduates. Based on our discussions with technology experts in Connecticut, some of these indicators are more meaningful than others. Contact us if you have suggestions for additional indicators or if you would like to help us track them.
First Quarter 2011 Report – VC deals within the Greater New Haven Region included:
+ $20 million, Rib-X Pharmaceuticals, New Haven, biotechnology
+ $20 million, SurgiQuest, Orange, medical devices
+ $2.5 million, Imedx, Shelton, software
Second Quarter 2011: Deals in the Greater New Haven area included:
+ $3.0 million, Cara Therapeutics, Shelton, biotechnology
+ Undisclosed amount, Hadapt, New Haven, software
Third Quarter 2011: Deals in the Greater New Haven area included:
+ $10 million, CIDRA holdings, Wallingford, measurement instrumentation
+ $3.64 million, BioRelix, New Haven, biotechnology
+ $7 million, Cara Therapeutics, Shelton, biotechnology
+ $50,000, Shizzlr, New Haven, software
Fourth Quarter 2011: Few major deals in Greater New Haven.
First Quarter 2012: Deals in the Greater New Haven area included:
+ $25 million, Kolltan Pharmaceuticals, New Haven, biotechnology
+ Undisclosed amount, Rostra Tool Company, Branford, industrial
Second Quarter 2012: Deals in the Greater New Haven area included:
+ $430,000: Affinimark Technologies, New Haven, medical devices
+ $1 million: Continuity Control, New Haven, IT services
+ $3 million: CyVek, Wallingford, biotechnology
+ $3.2 million: NovaTract, New Haven, medical devices
+ $316,000: uKnow, Guilford, IT services