Connecticut Technology Council

Rail Transportation Connects Tech Talent

Trains and Boats and Planes and More Trains

We spend a lot of time working to bring more money and support to start-up technology companies.  Still, when we look at the overall strategy of expanding our innovation “eco-system” for the state, the first steps often include some very un-innovation oriented dreams about finding ways to finance major improvements in better transportation connections to the world and improved movement of people within the northeast.

A change in the prospects for our infrastructure came last year with the Governor’s support for expanded transportation spending and the recent appointment of Joan McDonald - a transportation system expert - as the new Commissioner of the Department of Economic and Community Development (DECD).

 

One of the most exciting meetings of the summer was an understated event that took place in late June with a few dozen people in Springfield Massachusetts’s City Hall.  The topic was intra-New England rail connections.  Before your eyes completely glaze over, remember the billions being spent in Europe and Asia on high speed passenger and even freight service in the name of improving the regional innovation infrastructure.

The point was made that the relatively small size of our region makes it plausible – if we had true high speed connections – to imagine skilled workers commuting between towns 100 miles or so apart.  Given the coming demographically driven shortages of technology talent and the clogged highways of the south and southwest United States, a network of fast trains could make our region extremely competitive for young people as well as foreign investment.

There were discussions of trains from Boston to Portland Maine, commuter trains from New Haven to Penn Station, and thoughts about an inland high speed Amtrak Acela from New Haven to Boston by way of Springfield, thus opening up thousands of square miles to development as opposed to the relatively untouchable confines of the present shoreline route.

Consider a world, made possible by a new New England and New York financing authority where Albany, Worcester and Hartford are all within daily computing distances of each other and are part of an integrated Boston, New Haven and New York rail network, where Torrington and Willimantic are as connected as cities on Long Island or Northern New Jersey.

 

A final positive thought – I was sharing the old Connecticut dream of a return to the 19th century east-west rail links from the Hudson Valley to Danbury and on to Hartford with Commissioner McDonald and she not only did not laugh but noted that she had already supported Metro-North looking into using that very rail line to connect the Harlem and Hudson lines to the New Haven system.  That would change people’s perception of Connecticut within the New York metro region overnight.  And that would be good for the expansion of the technology community.

I just came from a conference where regional innovation development was the major source of discussion and debate. It was the semi-annual conference for state and regional technology council executives, held this summer in Boston.  Between trips to MIT and great seafood restaurants, the big discussions among the sixty or so folks from across North America were in the main about two topics: how to encourage the teaching and learning of STEM skills (Science – Technology – Engineering – Math), and comparing methods to entice, assist and finance high potential entrepreneurs.  One interesting side adventure was a discussion of a Facebook-like Web 2.0 environment for people over 50 [www.eons.com].

With each state having at least one Tech Council and some having several, the number of ideas and programs being swapped around was mind boggling. As you might expect, the Canadians – while competitive in a friendly way – all tend to benefit from considerable national and provincial government program dollars and are more likely to share best practices between regions of their country.  Lacking much in the way federal money and with no national priority to speak of, we are on our own.

But trends are emerging and I am happy to say that our programs at this Council are as varied and interesting as those of our sister organizations. One idea that came up was the need to concentrate on getting more of the 2,500 technology firms we work with in our Connecticut community to “opt in” to support our mission and become full fledged members.

So, as we head back into the fall and a full series of programs and events you can also expect a real push to enlarge our membership. It is the surest way to know that you all agree with our mission and methods.  We know technology firms are not joiners by nature –but busy growing ideas against long odds, and with little time to get involved in common business needs and networking. Still, in the months ahead we hope you will sign up to support our efforts that support your company by becoming a member of the Council.

Matthew Nemerson
President & CEO

Connecticut Technology Council
[email protected]   

Accelerating Start-Ups - Some thoughts for the "dog days" of summer

I recently caught a show on network TV that merged an American Idol format to the topic of innovation. It is called “American Inventor.”  The winning idea, encouraged by a panel of “experts” but ultimately chosen by the viewers, was a fire sprinkler for Christmas trees. Putting aside any judgment about whether this is our nation’s best idea for a new company or product, the take-away here is that there are many ways to identify great ideas.  Not every company will get to go on national TV and win $1 million, but new models are emerging that may end the traditional multi-year quest for funding. It seems clear that entrepreneurs are going to be attracted to regions that have support systems in place to quickly analyze concepts, and if they pass some kind of muster, to offer them money, help, space and perhaps even a temporary management team. The good news is that Connecticut is awash in groups looking to create these sorts of operations, including the Connecticut Technology Council’s own Innovation Pipeline Accelerator which is cataloging and working with start-ups.  The new models emphasize investments of small levels of working capital – $50,000 to $250,000 – after just a few weeks of review, and usually without personal liability on the part of the management team. With the investment comes a commitment to smother the fledgling company with help, often hands-on management assistance and careful monitoring of performance levels. The goal is to package the idea for serious amounts of venture capital more quickly.  Take a look at this organization in California which does nothing but network ideas, money and talent.  It is another take on the model we would like to see here in this state. Around the country states and organizations are setting up funds to dole out these very early stage investments. Some come from investors who made millions and now want to build a new generation of local entrepreneurs. Some investments, called “sidecars” spring from established VC funds that partner with Angel groups (these tend not to be geographically focused) and match them 1 or 2 to 1 in new deals. This allows the Angels to get into more deals and have a built in exit strategy with the VCs more traditional funds. Many new funds are the result of state appropriations being used to goose the local economy working through incubators, tech councils, state innovation agencies and hybrids like our own CCAT. The challenges will be to first convince private money that geographical preference makes sense, because we do want these companies to remain in Connecticut. Some investors, however, will insist that you move to Silicon Valley if you want their help.  Second, there will be a lot of work and education needed to keep governors and legislators comfortable with the realities of government money going into lots of small, high risk early stage investments.  The old model of lots of due diligence and a few multi-million dollar investments a year guaranteed enough success to maintain support. Many small investments can work well, but we need to realize some years everyone could strike out. This new model requires a belief that even in failure you are building serial entrepreneurs and innovation teams to rely on next time around. Some groups, both for and not-for-profits, are getting control of multiple product concepts from universities or corporation and allowing a common management team to develop them, spinning off successful ideas to grow and can walk on their own.  A recent article from the Kauffman Foundation lays out the new paradigm nicely.  Positioned along the northeast innovation corridor not from Boston, New York or Philadelphia, but still small enough to give attention as needed, Connecticut could actually create a very attractive opportunity for high potential entrepreneurs and company founders to relocate here.  One thing we still lack in Connecticut is sufficient very early stage money. So, the Council will be rallying support for another go at creating the Connecticut Angel Investment Tax Credit in 2008. We will also be working with the new management team at Connecticut Innovations to help them continue to make their investments quicker and smaller and with funds to employ consultants and folks like us to help their early stage portfolio firms.

Matthew Nemerson President & CEO Connecticut Technology Council [email protected]