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Rainmaker
Investment banker Lang works to get the Enterprise Center — and about three dozen new enterprises — up and running in New Haven
John C. Lang, 59, is president of the New Haven-based Enterprise Center, which seeks to help new enterprises get launched in and around New Haven. With support from Yale, the United Illuminating Co. and New Haven Savings Bank, the Enterprise Center is presently working with some three dozen new ventures in various stages of incubation
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Business New Haven
9/6/1999
By: BNH
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Who came up with the idea for the Enterprise Center?
[Yale Vice President for New Haven Affairs] Bruce Alexander and various members of the Yale community, including representatives of the School of Management, had had discussions about doing something like this last year.
How did you get involved?
A friend of mine was aware of what Bruce was doing and put me in touch with Bruce. Previously [1982-86] I was vice president and treasurer of Aetna Life & Casualty; I was their chief planning officer for business planning. From there I went to Merrill Lynch [in New York] as managing director of their Investment Banking Group. And then, in 1991, I started by own merchant banking firm [Lang Capital Associates Inc. in Safety Harbor, Fla.]. That's sort of winding up now. I had two partners who are getting older, while I really wanted to get into the non-profit arena to start to return something back to the community. So I was looking around at some different options, and I came down and talked with Bruce and talked with Charlie [New Haven Savings Bank CEO Terrell]. The hardest thing was to convince my Harvard-educated wife that New Haven was a good place to be.
Is this something of a lark for you?
We have made an absolute commitment to New Haven.
Are you living in the city?
We tried. We looked at real estate for months and made offers on [several] - at one point houses were going for $20,000, $25,000 over the asking price. Now we're living in Hamden. It was our desire to be in the city, but now at least we're very close.
When you first talked to Bruce Alexander and he described the concept of the Enterprise Center, how did he describe it?
It's almost easier to describe negatively. It's not an incubator; most incubators take companies that are already financed, and then they provide them with space and services. What we are trying to do is to build enterprises in New Haven.
Have you identified any candidates yet?
Right now we are working with 34 clients ranging in capital requirements from $180,000 - that's a retail operation that wants to come to downtown New Haven - to an application service provider - a consolidator of software for small and medium businesses - and they would like to put their operations center in New Haven. That's a $17 million capital requirement right now. Our target range is capital requirements of about $2 million to $6 million. When you start getting above $6 million, we just don't have the manpower; it's a much more intensive process. And under $2 million we would certainly look at, but $1 million to $2 million is an area that's very difficult to finance.
What about the types of companies?
What we're attempting to accomplish here is to be in step with the city. The city is very well established in biotech - New Haven is one of the biotech centers of the United States. Our focus has been in concert with that as a cluster, but more on medical appliances and medical devices. Right now we have two medical-devices applications that we're very confident of; one is in the funding stage.
As a group, how far along growth curve are the 34 companies?
Six companies are in the funding stage, where everything is put together and they're ready to go out [to seek capital] and get operating. There are eight companies that will enter that stage in the next couple of months; what's missing is that we may still be tweaking the [business] plan. In some cases, it's good to have proof of concept by market acceptance, and they're pretty close to being tested by [potential customers] in order to get a letter of intent [to purchase] from a major potential customer. We have another ten that are in the development phase, where we're still refining the concept, making sure that the market is established.
How do you evaluate these concepts?
Well, we have a very small staff [of three], so we're very dependent on the [Yale] School of Management, and we have a formal arrangement where the School of Management provides students and faculty support for evaluation. The University of New Haven has also been very helpful; they have an excellent applied engineering program, and we have used them in several instances to evaluate prototypes. So in the evaluation stage we want to see, first, that it's a viable concept - that the product works - and that there's a management team that is capable of taking the concept and bringing it into some form of a viable business, in many cases recognizing that true growth will require some additional management. The team is what sells the dream.
Have you had to turn any prospective entrepreneurs away?
We really try not to discourage anyone. Once you get in here, we really try to develop the concept to the point where it is viable. So far we've had very good luck; we've had to drop [only] three or four [potential companies]. We've got a couple where the idea just doesn't have a good application [to the marketplace]. But then we're in this evaluation phase, it isn't, 'It works, or it doesn't work.' It's, 'Gee - this doesn't work exactly the way we think it should, but if we make four or five adjustments to it...' We feel as if we're partners with the entrepreneurs. We actually get our hands dirty.
Where did those 34 entrepreneurs come from?
Not to sound egotistical, but I'm not unknown in Connecticut. Five or six of those came because they knew I was an investment banker through different contacts I have in Connecticut. New Haven Savings Bank has been very helpful [with referrals]; we've had some referred by law firms; we've had a couple through UI; we had one come in through CII [Connecticut Innovations Inc.]; and the city has begun to pick up on the fact that we're here. So it's a combination of word of mouth, agency referrals and sponsor referrals.
Are there really deals in New Haven?
There are plenty of deals in New Haven. These are 34 very viable deals. I don't think we're going to have a shortage of deals at all.
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