This document summarizes a panel discussion on funding sources and incentives for investment in Connecticut. The panelists represented various state programs, a private investment firm, and a law/accounting firm. They discussed state tax credits, grants, loans, and equity investments available from Connecticut Innovations and the Department of Economic and Community Development. The private investment firm described their debt and equity investments in Connecticut companies. The law/accounting firm overviewed various state tax credits for businesses. The event concluded with announcements of upcoming networking events from the hosting organization.
Funding Sources and Incentive for Investment in Connecticut - CVG Second Thursday, 1/10/13
1. Funding Sources and Incentives for
Investment in Connecticut
Moderator
Patrick O’Neill, P.E.
Director, Investments
Connecticut Innovations
Panelists
Dana R. Bucin, Esq. Claire R. Leonardi
Updike, Kelly & Spellacy Connecticut Innovations
William B. Claffey, Esq. John Strahley
Fiondella Milone & LaSaracina
Ironwood Capital
2. Funding Sources and
Incentives for Investment in
Connecticut
A Second Thursday Event
presented by
Crossroads Venture Group
January 10, 2013
University of Connecticut Health Center (UCHC)
Farmington
3. Funding Sources and Incentives for
Marketing at the ConnecticutLight
Investment in
Speed of
Welcome
Moderator
Patrick O’Neill, P.E.
Director, Investments
Connecticut Innovations
4. Funding Sources and Incentives for
Marketing at the ConnecticutLight
Investment in
Speed of
Panelist
Dana R. Bucin, Esq.
Updike, Kelly & Spellacy
5. Funding Sources and Incentives for
Marketing at the ConnecticutLight
Investment in
Speed of
Panelists
William B. Claffey, Esq.
Fiondella Milone & LaSaracina
6. Funding Sources in Connecticut – State Tax
Credits
William B. Claffey, Director of State Tax,
Credits & Incentives
Fiondella, Milone, & LaSaracina, LLP
7. Funding Sources in Connecticut – State Tax
Credits
FML, LLP Firm Overview:
– Regional accounting firm headquartered in Glastonbury with
satellite offices in Stamford, New Haven and Bristol
– Founded in 2002 when 3 founding partners broke away from a
national firm; currently 8 partners
– Strong focus on providing audit and tax services to high-
growth venture capital back companies.
– PCAOB registered with growing SEC practice
– Strong Accounting and Tax Consulting Services
8. Funding Sources in Connecticut – State Tax
Credits
Dispelling a Myth
– Is Connecticut bad for business?
– State Comparisons
Connecticut Tax Advantages
– Apportionment
– Tax Credits / Incentives
10. Funding Sources in Connecticut – State Tax
Credits
Tax Credits – What if I can’t use them?
– Refundable Credits
– Transferable Credits
– Value to the financial statements
Dealing with DRS/DECD
Questions?
11. Funding Sources in Connecticut – State Tax
Credits
Helpful Resources
– Information Publication 2010(13)
– www.ct.gov/drs
– www.ct.gov/ecd
– www.fmlcpas.com
12. Funding Sources and Incentives for
Marketing at the ConnecticutLight
Investment in
Speed of
Panelists
Claire R. Leonardi
Connecticut Innovations
14. Investing in Connecticut
CI grows businesses and jobs in Connecticut by providing
innovative financing and strategic assistance.
Access to
Capital
Strong
Expertise Track
Record
Strategic
Talent Advisers Partners
15. CI brings together best practices to grow
innovative businesses
Support high-growth small businesses – financing, active
engagement, connections
Help existing businesses innovate to grow and sustain
market position
Foster an entrepreneurial environment
Leverage outside support
Promote collaboration
Historically self-sustaining
VC program -- 18%+ gross IRR; invested $210 million;
leveraged over $1 billion in private capital
Loans -- $750 M loans; leveraged with $1.9 B from private-
sector partners
15
16. CI Financial Assistance
Equity and Risk Capital Investments
Debt Financing
Small Business Innovation (SBI) Funding & Services
17. Equity and Risk Capital
Startup Support
□ TechStart Fund
□ Pre-Seed Fund
□ Seed Investment Fund
Eli Whitney Fund – flagship fund
Venture & Mezzanine Debt Fund
Bioscience Facilities Fund
Connecticut Clean Tech Fund
18. Small Business Innovation
Supporting innovation, promoting collaboration and
fostering an entrepreneurial environment in Connecticut
through a variety of exciting initiatives:
Business counseling and strategic evaluation
Guidance on finding and obtaining resources and creating
collaborative partnerships
Talent development and retention
18
19. Other Tech Initiatives
CTech - technology business incubators
Angel Investor Tax Credit Program
Innovation Ecosystem
Connecticut Stem Cell Research Program
The Jackson Laboratory facility at UConn Health Center
20. Debt Financing
Financing from $25,000 to $5 million
Initiatives:
□ Direct loans
□ Loan Guarantee Program
□ Participation loans
□ URBANK Capital Access Program
□ Information technology financing
□ Brownfields redevelopment financing
Financing support through collaborations with network
of lending institutions statewide
21. DECD Financial Assistance
First Five Program
□ Large scale projects
□ Requires creation of 200 full-time jobs over 2 years or investment of
more than $25 million plus 200 jobs over 5 years
Direct loans
□ Low interest and flexible
□ May include forgiveness for reaching predetermined job creation goals
Tax credit programs
□ Job Expansion Tax Credit
□ Urban and Industrial Site Reinvestment Credit
□ Film Production and Digital Media Tax Credit
□ Enterprise Zone Program
□ Sales and Use Tax Exemption
□ Municipal Property Tax Abatement
22. Small Business Express Program
Goal and requirements
□ To provide capital to “Main Street” businesses with < 100 employees to
help create jobs
□ Must be a CT company that has been in operation at least 1 yr
Types of assistance
□ Revolving loan fund ($10,000 to $100,000)
□ Matching grant program ($10,000 to $100,000)
□ Job creation loan fund ($10,000 to $300,000)
Uses: machinery and equipment, construction, leasehold
improvements, training, working capital and other business related
expenses
Terms
□ Up to 4% interest and maximum 10-year term
□ DECD determines loan terms, conditions, and collateral requirements in a
manner that prioritizes job creations
26. $93.0 million unit of Ironwood Capital, a 25-year old, $600+
million investment manager based in Avon, Connecticut
All investment capital provided by insurance companies doing
business in Connecticut; formed as a Connecticut Insurance
Reinvestment Fund
Focused on and experienced in making a broad range of debt
and equity investments in early-stage through mature
Connecticut companies
27. Business must be based in Connecticut
Must have fewer than 250 employees
Must have less than $10 million of net income
80% of the employees must be Connecticut residents
Strong growth potential
Ability to service debt
Identified exit strategy
28. We invest between $1 - $10 million of capital in later-stage
growth and cash flowing companies to:
◦ Support organic growth
◦ Make acquisitions
◦ Augment existing capital providers
◦ Refinance existing debt
We can provide more flexible terms and conditions than many
traditional sources of capital:
◦ Fixed and variable interest rates
◦ Flexible amortization tailored to meet business needs
◦ Streamlined process
◦ Pragmatic underwriting
29. Investment Experience – 12/31/2012
$48 million invested in 24 Connecticut companies
Investment types:
◦ 80% Debt
◦ 20% Expansion Equity & PreSeed Investments
Broad Industry Representation:
◦ Manufacturing
◦ Information technology
◦ Business Services
◦ Environmental Services
◦ Green Tech and Clean Tech
30. Ironwood Capital Connecticut
Victor Budnick, Managing Director
◦ (860) 409-2108
◦ Budnick@ironwoodcap.com
John Strahley, Managing Director
◦ (860) 409-2106
◦ Strahley@ironwoodcap.com
Alex Levental, Director
◦ (860) 409-2109
◦ Levental@ironwoodcap.com
Mike Benson, Senior Associate
◦ (860) 409-2115
◦ Benson@ironwoodcap.com
31. Funding Sources and Incentives for
Marketing at the ConnecticutLight
Investment in
Speed of
Upcoming CVG Events and Closing Remarks
Liddy Karter
Executive Director, Crossroads Venture Group
Managing Partner, Enhanced Capital Partners
33. THANK YOU CVG SPONSORS
A Round
Venture Capital Sponsors
Professional Service Firms
34. Upcoming Events
February 12
A Guide to the Digital Media Market Ask about CVG’s 2013
University of Connecticut, Stamford
4:30 PM – 7:00 PM
Boardroom
Series
March 14
Navigating the FDA: Getting to Market
Anylan Center, Yale University, New Haven
4:30 PM – 7:00 PM