Hartford Business Journal

14 Hartford Business Journal • November 20, 2017 • www.HartfordBusiness.com By Matt Pilon mpilon@HartfordBusiness.com N early two dozen Israeli startup executives and government officials, fresh off visits to New York and Philadelphia, made one last stop on their East Coast road show this month — to downtown Hartford. It was the first visit of its kind to Con- necticut by Israeli economic development officials, and the goal was to advance a relationship between a country and state/ region that have spent years trying to strengthen their economic ties. "An Israeli delegation has never stepped foot in Connecticut," said Shana Schloss- berg, founder of Hartford's new accelerator Upward Hartford, who, along with the Con- necticut Economic Resource Center (CERC), organized the gathering. "I said 'come and I'll give you a day you won't forget.' " And indeed, it was a production. The Israeli companies, all of which are in the medical-technology space, pitched and were introduced to representatives from some of the region's largest employers in Upward Hartford's slick new co-working space in the Stilts Building, 20 Church St. Local companies in attendance included Aetna, Cigna, Travelers, The Hartford, Hart- ford HealthCare, St. Francis Hospital and Medical Center, Stanley Black and Decker and United Technologies Corp., among others. The Israeli delegation also dined in downtown Hartford and was welcomed by state lawmakers and Connecticut's top eco- nomic development chief, Catherine Smith. Connecticut, with assistance from groups like CERC, the Jewish Federation of Greater Hartford and the MetroHartford Alliance, has been trying to woo Israel — sometimes re- ferred to as Startup Nation — for years. Those efforts have included hosting Connecticut- Israel technology summits and a 2013 trip by the state Department of Economic and Com- munity Development (DECD) to Israel. The courting has borne some fruit: In recent years Israeli companies Biological Industries, a stem-cell culture distributor, and software developer Applango, have opened Connecticut locations in Cromwell and Stamford, respectively. But the delegation's recent visit was seen as a potential next step in developing the relationship. "This has really solidified our work over the past couple of years," said Jason Giulietti, a business recruitment vice president at CERC, which helps companies, including foreign ones, find locations, connections and incen- tives in the state. "It takes us out of the minor leagues and puts us in the major leagues." Israel, a country of 8.5 million people that nourishes its robust tech economy by doling out approximately $500 million a year in economic incentives, wants to have a closer relationship to Connecticut. "What we're identifying here is how we can create that deal flow," said Jonathan Cohen, North American manager for the Israeli Innovation Authority, which is the country's economic development agency. Ultimately, Cohen said he would like Israel and Connecticut to sign a memoran- dum of understanding that would formalize the commitment of each government to an economic partnership and would lead to more Israeli companies coming here. The delegation had just come from sign- ing a memorandum of understanding with Pennsylvania state officials. With or without that formal agreement, more Israeli startups are planting roots in Hartford — an area that has struggled to attract early stage companies, compared to New Haven and Fairfield counties. Schlossberg, who is connected to Israel's startup community after living there from 2008 to 2012, has signed leases with four Israeli startups this year, and she expects to sign on three more from the delegation, though she wasn't yet ready to name them. Schlossberg said signing the first company — Project Ray, which makes braille-like tech- nology to help the visually impaired use smart- phones — made it easier to attract others. "Israelis work based on trust — they go where someone told them it works," she said. "If you make a good experience for one, it's word of mouth." Schlossberg has enjoyed the support of DECD and Connecticut Innovations, which have issued joint $250,000 low-interest loans to the companies she has recruited thus far. Cohen said Hartford's and Connecticut's well-publicized fiscal problems won't neces- sarily deter Israeli companies from thinking about a presence in the city or state. "In Israel you can go and find deficits too," he said. "I think if you invest in those com- panies, in those stakeholders, the economy will flourish." Inon Elroy, Israel's economic minister to North America who was also in Hartford, said Israeli startups, located in a tiny but dense country that largely doesn't have good rela- tions with its neighbors, must look outward. "Israeli companies need to have an inter- national presence from almost the very first day," he said. Cross-Continent Connections Hartford, state aim to build bridges with Israel's tech economy Miri Berger, co-founder of the Israeli startup 6Degrees, demonstrates an armband to enable those who have lost the use of their hands to use a computer mouse or smart phone. DECD to tighten incentive deal oversight for out-of-state companies By Greg Bordonaro and Matt Pilon gbordonaro@HartfordBusiness.com; mpilon@HartfordBusiness.com T he state's economic development agency said it has made changes to the way it vets out-of-state busi- nesses that seek economic incen- tives, following a deal in which it provided $400,000 in loans and grants to a New York- based company whose owner was facing fraud allegations in other states. The state Department of Economic and Community Development wouldn't elaborate specifically on what changes it's making, but the tighter oversight is in response to an in- centive deal it provided to medical-technolo- gy investment firm CliniFlow Technologies. The Hartford Business Journal reported earlier this month that DECD provided CliniFlow with the $400,000 in January in exchange for the company's promise to create eight jobs in Hartford. In a separate deal in February, the state Bond Commission approved an additional $3.6 million for Clini- Flow, which planned to move three medical- technology startups to Hartford in a newly built office building and create 195 jobs as part of a $45 million project. But before those deals were either ap- proved or granted, CliniFlow's CEO and founder David Wagner, and other companies he's as- sociated with, were named in several civil lawsuits in vari- ous states. One suit, filed in New York federal court in May 2016, accused Wagner and associ- ated companies of "outright fraud" and running a "Ponzi-like" scheme that used money from new employee- investors to pay back wages of existing work- ers, federal court records show. Wagner — a Trinity College alum who until recently sat on the private school's board of trustees — has denied the allega- tions in court. Wagner and his companies have also settled at least one suit brought by a for- mer employee, and another resulted in a $181,480 judgement, court records show. Meanwhile, two suits are ongoing in New York and a judge overseeing both cases has restricted the assets of an array of Wagner companies, including two that were slated to relocate to Hartford: 3si Systems LLC and Vox MediData, according to court records. Additionally, the company's website (www. cliniflowtech.com) doesn't work and in August CliniFlow stopped making rent pay- ments on 4,152 square feet of Hartford office space it leased at 425 Franklin Ave., accord- ing to a lawsuit filed in state Superior Court in September by the building's landlord, The Greca Plaza LLC. As part of its origi - nal pitch, CliniFlow planned to relocate three of its health- technology compa- nies — 3si Systems, SpearFysh and Vox MediData — to a newly built, 70,000-square-foot office building on properties (at the corner of Jefferson and Wash- ington streets) owned by Hartford Hospital. In August, however, the state pulled the plug on its $3.6 million in bond funds, which were never distributed to the company, after Clini- Flow failed to meet certain project milestones. Taxpayers, however, are still on the hook for the $400,000 aid package provided to CliniFlow planned to relocate near Hartford Hospital's campus. David Wagner, CEO and founder, CliniFlow Technologies HBJ PHOTOS | MATT PILON PHOTO | CONTRIBUTED

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