Hartford Business Journal

www.HartfordBusiness.com • May 28, 2018 • Hartford Business Journal 15 and for entrepreneurs to understand the process and kind of where to go for these sources of funding," he said. "I think bringing a cohesive ecosys- tem together with education for the entrepreneurs about how to go about this is really the important thing," DeMartino added. DeMartino said Boston's ecosystem is very robust, adding that entrepreneurs there know who to go to and where to go to look for funding, less so here. Connecticut companies are also located between two very big invest- ment environments, New York and Boston, so AIF investors get pitched from companies there often, meaning Connecticut companies are essentially competing for AIF funding against those markets, he said. AIF, which has held steady at about 40 members for the past several years, evaluates applications, invites three companies per month to pitch, after which members can opt to advance to due diligence and potential invest- ment, he said. Members invest individ- ually. Groups like AIF generally bring $200,000 to $500,000 for a company they like, he said. A $250,000 AIF investment might include 10 angels at $25,000 each, for example. "We've done, collectively as a group, individual deals that are as high as $1.2 million," he said and rounds in the $400,000-to-$600,000 range. Companies need to sell themselves, too, he said. Often, they have a build-it- and-they-will-come attitude, thinking investors will automatically flock to their idea or product. "It doesn't work like that," he said. Companies need to realize that get- ting investment, especially if they're pre-revenue and don't have a track record, is a sales process, he said. Upward Hartford's Schlossberg agrees. "You have to hustle," she said. "From our positions, we have to sell these com- panies like we're selling shoes in a store." Another perspective David O'Leary, an angel investor who moved to Springfield, Mass., from Mary- land, outside Washington, D.C., less than a year ago, is still learning Connecticut, but attended reSET's Venture Showcase on May 10 featuring eight companies that went through reSET's accelerator program. As a member of the national Investors' Circle — which bills itself as the world's largest and most active early stage impact investing network that has helped entrepreneurs focused on improving the environment, education, health and community — O'Leary has a personal interest in clean energy. He saw a couple companies at the showcase that he planned to introduce to other potential customers or inves- tors. While most angels tend to invest locally, there's more syndication today of groups working together on deals and it's easier for entrepreneurs to make their initial pitch with more dis- tant potential funders through technol- ogy like video conferencing, he said. O'Leary said having a group of angel investors working together to support an entrepreneur or an entrepreneurial eco- system works better than several people working independently from each other. He also sees room for getting more women involved in early stage investing. There are plenty of "old, rich white guys" investing in computer science entrepreneurs out of Harvard, MIT and Stanford, and "while that part is work- ing, the rest isn't working too well and as a result you're kind of missing big chunks of the market," O'Leary said. He noted a group of women in Massachu- setts' Pioneer Valley forming a VC fund that intends to look for investments in the Connecticut River Valley, he said. While other parts of the country have higher concentrations of investors and well-developed ecosystems, the Hart- ford region has diverse entrepreneurs and myriad pieces to the ecosystem, in- cluding UConn and accelerators, he said. "You're not out in the middle of no- where, there's certainly a lot of wealth in the state of Connecticut," O'Leary said. "So what's the catalyst that brings us all of those pieces together is still maybe a question mark, but it feels like we're getting closer." Entrepreneurs offer thoughts for improving startup climate Spencer Curry, co-founder and CEO, Trifecta Ecosystems Spencer Curry, co-founder and CEO of Meriden- based Trifecta Ecosystems, an aquaponics technol- ogy company and indoor farm, said finding the right investors — those who can bring more than money to the table, including experiences comple- mentary to the company — can be difficult. Connecticut has some incredible expertise in a few specialized silos, Curry said, adding, "It's not a barrier, but it's an opportunity to both develop those silos further but also expand them to increase the breadth of com- panies that can succeed here." His company has enjoyed some welcome, smaller invest- ments, including a couple $30,000 convertible notes with angels that were key, "but then when we went back looking for more money to grow further, we couldn't find that higher dollar amount that we needed," he said. "So having people who can stomach either larger investments or a larger flock of angels who are able to band together more effectively, I think, is critical," Curry said. Because Trifecta Ecosystems needs a lot of hardware, it requires substantial capital and the company is close to a deal for a couple million dol- lars from a Connecticut investor, he said. "That being said, it was very much luck of the circumstances that we found this group and it's taken us well over a year to develop it to this point," too long for most startups, Curry said. The company was able to get through, but the time required to find financing in the state significantly impacted its abil- ity to grow, he said. Adam Lazar, founder and CEO, Asarasi Adam Lazar, founder and CEO of Danbury-based Asarasi, which bottles pure water from maple sap (pure plant-based water remains after all sugar is extracted from the sap) said state Department of Economic and Community Development grants and loans tied to job production over a certain time frame aren't nec- essarily realistic for startups. While such funds are helpful, startups create opportunities and grow jobs later, he said. His company declined a DECD loan approval, he said, but was grateful to receive $150,000 in CI pre-seed funding. Getting follow-on investment, though, along with the right angel in- vestor can be challenging, Lazar said. He's received most of his angel investments from the U.K., Cali- fornia and New York. He praised incentive programs like START-UP NY, which helps new and expanding businesses through tax-based incentives and innovative academic partnerships, including the opportunity to operate tax-free for 10 years on or near eligible university or college campuses in New York state. "It really helps foster business growth in those economic zones," Lazar said. Richard Portelance, founder and CEO, CareerPath Richard Portelance says Connecticut's investor community is highly focused on biotech, leaving few resources available for other sectors, forcing in-state companies to look outside the state for investment opportunities. The New Milford founder and CEO of Career- Path — a platform billed as enabling college career-planning teams to effectively connect and communicate with students to help them tackle their career-planning objec- tives in an organized and manageable way — has got- ten all his company's funding outside Connecticut, which he said could affect its ability to stay here. It's seeking ed- tech funding in Boston and New York and he said a Bos- ton opportunity could mean moving the company there. Citing InsurTech Hartford's advocation for that industry, he said "birds of a feather need to flock together and form mass to attract" investors. The state's small enough for a group to form and dem- onstrate opportunities for investors, he added. As for the state, it needs to continue to build educational hubs and incentivize businesses to amass around those hubs, Portelance said, citing successful models in Boston, North Carolina and elsewhere. "We should pick three areas — Hartford, New Haven and Danbury — and invest in those areas and build up infrastructure and support," he said. Richard Portelance Spencer Curry Adam Lazar (Starting left) Venture capital investors and business advisors Alan Mattamana, Claire Leonardi and Lalitha Shivaswamy listen to a presentation at reSET's recent Venture Showcase.

• Cover