Hartford Business Journal

8 Hartford Business Journal • February 10, 2020 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com A fter four years, the state's quasi-public venture capital arm is ending its $5-million an- nual pitch competition, which brought to Connecticut start- ups from more than a dozen countries. Connecticut Innovations (CI) is expected to announce soon that it will not be hosting in 2020 its annual Ven- tureClash contest, which allows start- ups to compete for investment offers of up to $1.5 million, said CI CEO Matt McCooe in a recent interview. CI is ending the program due to the rise of various business accelera- tor programs in Hartford that are focused on recruiting and incubat- ing global startups in major indus- tries like insurance, health care and manufacturing, McCooe said. CI wants those programs to do the global outreach and marketing that VentureClash required, soaking up "a huge amount of time and effort" for the 35-employee agency, Mc- Cooe said. Besides the VentureClash finals event held at Yale's New Haven campus each fall, the program also entailed events and recruiting in Nigeria, Israel, Canada, Ireland, Ger- many, England and the Netherlands. Some CI personnel attended those events, but the agency also relied on various foreign partners to help. CI isn't done investing in promising new companies, McCooe stressed. It's merely ceding more of the incubation work and global outreach. "We are the state's VC fund and I'm very happy for us to be in a support role rather than a lead role," he said. CI has approximately doubled its number of portfolio companies, to about 200, under McCooe's leader- ship, and he expects to reach 300 in the not-too-distant future, he said. A long-term play As CI mothballs its VentureClash competition, it's still too soon to judge whether it's been successful, McCooe said. That's because an early stage in- vestment can take 12 years to pay off (or not) through an acquisition or IPO. Regardless, it did have some clear wins and losses. "We entered this program with one major goal in mind — increasing the pipeline of international companies," said CI Board Chairman Michael Can- tor, of intellectual-property law firm Cantor Colburn. "What happened over the last four years was so much better than that." CI invested in about a dozen compa- nies out of approximately 26 startups that placed in the money at Ventu- reClash over the past four years. Those 12 start- ups have about 30 employees in Connecticut to- day, a number CI hopes will grow as the companies scale and mature, McCooe said. VentureClash has also helped CI develop closer ties with major Connecticut cor- porations and institutions — includ- ing Travelers Cos., Unilever and Yale — that have been involved as competition sponsors and judges, sparked by their interest in up-and-coming technolo- gies in their respective industries. CI has also built new and stronger partnerships with venture firms in other states that have co-invested in its VentureClash deals, and the contest has, in general, increased global awareness of Connecticut's startup ecosystem, said McCooe, who spearheaded the contest's creation not long after CI hired him away from New York in 2015, where he had been a managing partner at venture capital firm Chart Venture Partners. "I thought we needed more deal flow, we needed more companies to look at," he recalled. Now, cross-fertilization between CI and the various startup accelera- tor programs in Hartford — includ- ing Hartford Insurtech Hub, Upward Labs, Stanley+Techstars Accelera- tor, Nassau Re/Imagine and Digital Health CT — is benefitting compa- nies they've attracted here. It's also brought CI new invest- ment opportunities. For example, Pineapple, founded in South Africa and provider of a peer-to-peer insurance app, won first place at the 2019 VentureClash after previously going through the Hartford InsurTech Hub accelerator. "It makes the point that we can rely on the bootcamps to get a good deal flow for us," McCooe said. Another standout from Venture- Clash, McCooe said, is Covr Financial Technologies, a digital life insurance software developer previously based in Idaho that established a Hartford headquarters last year and now has 18 local employees. Of course, there have been setbacks along the way. For example, the top two VentureClash winners in 2017 — hailing from the Netherlands and Israel — ultimately decided against moving to Connecticut. One of those startups — Friss, which makes insurance-fraud detec- tion software — opted to locate in another state. McCooe said there were vari- ous reasons CI didn't close deals with some Ventu- reClash winners. Some compa- nies' long-term prospects didn't look as rosy when more in-depth due diligence was done. CI is also required to hold com- panies accountable for their Con- necticut-based job-creation com- mitments, which has led to a few instances in which CI declined to do a follow on investment. CI's goal had been to invest in roughly half of VentureClash's win- ning companies, McCooe said, and it fell just shy of that mark. While he is confident that Connecti- cut industries and accelerators will continue to draw interest from global startups, he's more worried about attracting new venture firms to the state and ensuring technology start- ups here are able find enough talent. "CI needs to have a stronger hand in supporting these companies' recruiting needs," he said. "The com- panies have told us they have a hard time hiring people here." What can be done? McCooe said he has a few ideas he's not yet ready to share. So, like figuring out Ventu- reClash's impact as it sunsets, stay tuned. Program Sunset CI's VentureClash pitch competition fades as startup incubators take on larger role Michael Cantor, Board Chairman, Connecticut Innovations Marnus van Heerden is a South Africa native and co-founder of insurance app Pineapple, which won first place at the 2019 VentureClash competition. Matt McCooe helped launch Connecticut Innovations' $5-million VentureClash competition, which is now ending. McCooe said a stronger Hartford startup ecosystem can take over more of the recruiting and incubation work. PHOTO | HBJ FILE PHOTO | HBJ FILE

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