Who are we? An allianceof two venerable organizations

Promotes growth & innovation

17 year old State-wide trade association to support the technology community. Members include largest to small firmsSpeak for 2,000 tech firms Global and national affiliations

Best practices in other states -TECNA• 2011 Connecticut Competitiveness Agenda• Annual Legislative Agenda• Women of Innovation• Tech Top 40 Awards• 100 Companies to Watch Awards• Monthly PowerMatch• Various forums: CEO, CIO• Peer to peer month roundtables

Connects ideas and capital

25 year old State-wide trade association to support the venture and risk capital community to the creation of start-ups and the availability capital.

Members include VCs, key service providers, entrepreneurs

• Crossroads Venture Fairs• Entrepreneurial funding events• Regional Chapter meetings & events• Development of VC funds & community• Connections to Angels and Private Equity

Combined audience of over 15,000

people and firms in the innovation and tech-support community

Connecticut and the role of Innovation

Matthew NemersonJanuary 2012

2.0

5Map: University of Pennsylvania

How to innovate?

Innovation Asset Requirements

Tangible Assets• Entrepreneurial Capacity• Business Acumen• Risk Capital• R&D Enterprise• Technology Commercialization• Human Capital• Physical Infrastructure• Industrial Base• Global Linkages

For an entrepreneurial ecosystem to flourish, the following assets must exist within a region:

Intangible Assets“A Buzz”Networking OpportunitiesCulture that is Supportive of

InnovationCommunity Mindset

Business Climate AssetsGovernment PoliciesQuality of Life

A quick history of Connecticut Innovation

• 17th century - Cheaper labor – Religious intolerance and dispensations

• 18th c – Distributed mercantilism – Successful farms, capital, iron deposits,

access to market• 19th c – Advanced Machinery to

compensate for lack of European quality labor skills– "A substitute for European skill must be sought

in such an application of mechanism as to give all that regularity, accuracy and finish to the work which is there affected by a skill...." Whitney

– Whitney > Colt > Smith & Wesson > Winchester

– Parallel innovation of inventions & implementations

The 19th Century Invention paradigm

• Cluster of inventors • Support by expert mechanics• Power: water & coal• Transportation: water & rail• Labor: immigrant and local• Capital: New York, Boston and local

(using banks and “new” stock corporation)

• Regulation – flirting with public control of rail and utilities (business inspired)

• Public investment in health, education

Samuel Colt

Elisha Root

Legislated innovation networks in the 19th century

• The center was the Springfield Armory, founded in 1794.

• It became an incubator of technology to achieve interchangability of parts.

• Why? Private contractors who held government contracts had to share their inventions

• When Sam Colt was first studying to mass-produce guns, the Armory was the first place he visited.

20th Century• New York Ex-urbs• No Income Taxes• Connecticut Throughway (I-95)• Successful small towns &

schools• Major industries with large

supply chains– Aero-space– Finance– Insurance

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

Source: Kauffman Foundation and ITIF, 2010 State New Economy Index.

*Gazelle Jobs taken from Kauffman Foundation and ITIF, 2008 State New Economy Index.

Why the disconnect?

Positive attributes

Negative results

The share of CT’s jobs in high tech sector is declining

State Share of Jobs in High Tech sector, U.S. Rank 2008

Massachusetts 1

Maryland 4

New Hampshire 6

Washington 7

Connecticut 18

Source: AeA, Cyberstates 2008 (Washington DC: 2008) and AeA, Cyberstates 2001 (Washington DC: 2001).

While young companies create most jobs, older ones lose them

Connecticut, 2008 Employees % of Jobs CT RankStage 1 (2-9) 30% 34Stage 2 (10-99) 33% 44Stage 3 (100-499) 14% 23Stage 4 (500+) 15% 7

Source: YourEconomy.com. Edward Lowe Foundation.

Need to increase startups and stage 2 growth

16(c) CTC 2010

-5,000

+250,000

+55,000

-20,000

The Connecticut Paradox

“Personally, I love it here, but it’s not a good place for my business.” - Connecticut CEO of a fast growing firm

So firms stay until beyond their comfort point and then often leave or find themselves underperforming. Intervention is needed earlier and start-up roots need to be explored and reconnected.

CEO feelings about ConnecticutIt is very good for my company here 28%It is not good for my company to stay here 14%It’s great for me personally, and it’s OK for my business for now 59%

Why not Connecticut? CEOs said…Issue Mentioned in

Interview

State (or Governor) doesn’t know my company and does not know how to help me. Others state’s seem more on top of my needs

72%

University Research – Hard to connect with professors, grad students and labs; tech transfer complicated. I do better with other state’s universities.

66%

Connections & Networks – Regional innovation networks are frail or non-existent, hard for young talent to find us, highway makes it hard to get to NYC or the world quickly, squandering our great location.

62%

Risk Capital – Seems harder to get here and investors are not as excited about my industry

62%

Critical Mass – Not enough other entrepreneurial companies like mine. Top competitors are elsewhere. Need to be in the center of the action for future success. Will be harder to recruit top people, customers and investors.

55%

Is it Worth the Cost? – My objective is growth, not cost-minimization: high cost worth it if the environment is world class for growth and key employees. This competitiveness is not something people think about a lot here.

45%

What we need to grow jobs

• Strong networks – where people know each other through out the region

• Contented CEOs - who recommend the state to their best friends

• Venture investors - who move their best firms to Connecticut and take higher risks on our start-ups

• Synergies - Agencies, organizations and institutions that collaborate and create partnerships

Jobs > Growth

The Innovation Job Growth Eco-systemThe Innovation Job Growth Eco-system

20Image – Global perceptions

VentureLater state

Infrastructure – Global connections

Early StageSeed

Incubators

NetworksAssociations

MentorsGrants

SkilledWorkersStudents

Innovation Accelerators

SBIR

Validation

Entrepreneurs

AngelInvestors

Technology Transfer

UniversityR&D

Government Incentives

New jobs come from a deliberate process that requires many parts of a puzzle to contribute and be better than other locations at each step…

CorporateSpin Outs

So, Connecticut’s venture capital community focuses elsewhere

Source: Sources and Targets of Venture Capital Investments 2009, National Venture Capital Association, PriceWaterhouse Coopers

The percent of venture capital managed in Connecticut that is invested in-state is lower than in competitor states

1. Policy and culture

2.Technology & Ideas

3. Risk Capital

4. Acceleration & Facilities

5. Gov’t Incentives

6. Networks, Entrepreneurs &

Human Cap.

7. Global Connections and

Branding

8. Transportation & Broadband

Jobs + Growth

An innovation virtuous cycleAn innovation virtuous cycle

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

A diverse planning group

Startup Connecticut

Planning Board

Advisory

Board

A combination of Entrepreneurs, NGOs, Government and business leaders working together

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The Connecticut

INNOVATIONECOSYSTEM

Looked at all the programs in the state

Goal 1 – Fostering high potential Start-Ups

1. Business plan competitions2. Accelerators (e.g., TechStars)3. Virtual Incubators 4. Building Based Incubators5. Funding (Grants, stipends, Pre-Seed investments, Angel

connections, etc.) 6. Retention Efforts for growing firms7. Sponsored research programs for idea and product

development between companies and in-state schools8. Proof of concept Center with labs--Gov’t as market maker9. IP Factory and corporate networks10. Student Teams and Interns Programs11. Mentors Network, recruitment, training and matching12. Entrepreneurs-In-Residence 13. “Rent a CxO” and turn-key management capacity for qualifying

early stage concepts and firms14. Serial Entrepreneur Fellows – Global Attraction Program15. Professional Services matching and pro bono bank16. Place-making and infrastructure such as i-TOD efforts to build a

critical mass and a competitive set of locations17. Branding and image coordination18. Key labor matching and procurement programs19. Technology training programs (i.e. CCSU, CC)20. State, regional and hub based networking programs

Goal 2 – Assisting Stage 2 firms

1. New Technology, customer needs and marketing analysis2. Connections with larger firms & new supply chains3. Proof of concept contracts with state agencies4. Grants and debt availability5. Regulatory relief and help6. Young talent, Job Training and matching7. Build a retention strategy and mechanism8. Opening up universities to collaboration9. Sponsored research programs for idea and product

development between companies and in-state schools10. Proof of concept Center with labs--Gov’t as market maker11. IP Factory and corporate networks12. Student Teams and Interns Programs13. Mentors Network, recruitment, training and matching14. Entrepreneurs-In-Residence 15. “Rent a CxO” and turn-key management capacity for

qualifying early stage concepts and firms16. Serial Entrepreneur Fellows – Global Attraction Program17. Professional Services matching and pro bono bank18. Place-making and infrastructure such as i-TOD efforts to

build a critical mass and a competitive set of locations19. Branding and image coordination20. Key labor matching and procurement programs21. Technology training programs (i.e. CCSU, CC)22. State, regional and hub based networking programs

26

Programs were selected and then prioritized by a process of expert surveys…

27

Group ranked the programs on key attributesPu

blic

Fun

ding

Managed at State Level

Managed at Hub Level

Creating Markets

Reg. Relief & Help

Retention Efforts (Startups) STEM Programs

Grants & Debt

Key Labor Matching

Connect-ions to Large Firms

Priv

ate

Fund

ing

Mentors Network

Retention Strategy (Stage 2)

Prof. Services

Matching

Tech, Customer,

Mkt. Analysis

Virtual Incubators

IP FactoryB-Plan

Competitions

Accelerators

Proof of Concept Ctr.

University/Industry

Collaboration

Serial Entrepreneur

Fellows

Sponsored Research Programs

Building Incubators

Student Teams & Interns

Young Talent, Training, Matching

Entrepreneurs in Residence

Rent-A-CxO

Networking Programs

Place Making

Funding

Branding

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

Think about the geography of the system28

Greater Hartford

Storrs/New

London

Greater New Haven

Fairfield County

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

Interconnected tracking systems

Business Database with, company info, NAICs and growth

information by company [SOTS]

Statewide knowledge-base (iHub) to make

people, resources, special skills, etc.

findable when needed [CI/Startup CT]

Comprehensive web portal and tracking system

for incoming business requests and needs [DECD]

Tracking Systems

For Startup

Connecticut Innovation Ecosystem

Track goalsHubs &

programs: objectively &subjectively

ClusterAdvisory Groups

<Data Collection

Portals, DBs andKnowledge base>

A state innovation model blueprint

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

Model how the Hubs might work31

Hub Model

Draft – Please do not forward or copy

The Connecticut

INNOVATIONECOSYSTEM

Set goals to measure a performance

1. Success should be actual growth and jobs- Goal 1 – 50 high potential startups each year- Goal 2 – 75 “stage 2” firms assisted each year

2. Change culture of relationship between business and government- Agility, rapid cycles of program changes and improvement- Culture of experimentation and collaboration

33Map: University of Pennsylvania

Projected growth “winners” by 2050Projected growth “winners” by 2050

Upbeat thoughts to close on…

• Environment favors Connecticut– Water, warming, regulations

• Density can go up– Our cities are small and have capacity

• Intra-Regional transportation – Metro-North and Amtrak can expand

• Housing stock is strong and well built (if old)• Near population centers of youth & talent (NYC, Boston

and Washington)• But…Need to focus on growth and changing population

Stamford and New Haven do well versus other hip small cities…

1990 2000 2005 2007 200817

19

21

23

25

27

29

31

33

35

Percentage of Population 25-39Source: American Community Survey

StamfordAustinNew HavenMinneapolisDurhamBoulder

Being competitive is just that…you need to win

Emerging Markets 2012• Decision Engines – Discovery fueling invention and purchases• Collaborative Commerce – Community sharing, bartering, lending, renting and

gifting• Customization – Uber personalization• True Mobility – Leaving the PC behind• Creativity – Inspiration from the Everyman• Urban Farming – Local, local, local• Gamification – Revolutionizing customer engagement• Design – Pretty goods for the masses• Extreme Fitness – Boot camps and mud runs to beat workout boredom• Jobs – Rescuing the unemployed• The One to Watch: Unmarrieds – Catering to Singles

Where Do Good Ideas Come From: The Natural History of Innovation, Steve Johnson 2010

If there is a single maxim that runs

through this book’s arguments, it is

that we are often better served by

connecting ideas than we are by

protecting them…environments that

build walls around good ideas tend

to be less innovative in the long run

than more open-ended

environments. [Ideas] want to

complete each other as much as

they want to compete.