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N.H. Savings rolls out
$15 million for technology start-ups
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Business New Haven
10/19/1998
By: Alix Boyle
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If you're a brilliant but impecunious entrepreneur in the computer software, medical engineering or environmental fields, the future just got brighter.
New Haven Savings Bank has unveiled a $15 million fund aimed at providing investment capital to high technology companies in greater New Haven. Half of the fund targets start-up and early-stage businesses.
Even though the fund will not begin disbursements until next month, NHSB vice president Paul A. McCraven says he's already received several early inquiries for loans. While it's not unheard-of for banks to enter the venture-capital field nowadays, it is unusual for a fund to be restricted to a particular geographical area.
“It's very difficult for start-up companies to find capital,” says McCraven. “We wanted to create something to help this region, and to have a fund dedicated just to this one area is pretty significant.”
New Haven Savings has invested $5 million; the remaining $10 million is being contributed through the Small Business Investment Corp. program overseen by the U.S. Small Business Administration.
Zero Stage Capital Company Inc. of Cambridge, Mass., which has successfully invested in fledgling high-tech companies, will manage the fund.
The New Haven fund will also be part of a larger $100 million New England fund providing diversification and lower risk to the bank.
With a critical mass of high-tech companies growing in the region, NHSB president and treasurer Charles L. Terrell wanted to enhance the entrepreneurial atmosphere and asked McCraven to figure out a way to create a fund to do so. McCraven will represent the bank on the Connecticut Advisory Board, the board of directors that will be formed to advise Zero Stage Capital.
Neither the bank nor the advisory board will participate in investment decisions.
It is hoped that more high-tech firms will be attracted to greater New Haven, especially those that are spin-offs from Yale University and other area research institutions. Representatives of Yale will also serve on the advisory board, working with the fund managers to identify companies with long-term growth potential.
Aside from high-tech companies, McCraven envisions the fund investing in interactive media, telecommunications, networking, energy and materials technology. Other innovative product or service companies may be considered for investment as well.
Investments in early-stage ventures will range from $250,000 to $500,000. Total fund investment in any one company will not be more than $2,500,000. Zero Stage Capital will open a New Haven office with a full-time officer dedicated to finding and nurturing local investments.
In addition to lending money, Zero Stage will also provide the local companies selected for investment with advice on organizing and operating the new business.
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