|
|
|
Attracting Funds
for High-Tech Firms
BNH interviewed Mike Roer, executive director of the Connecticut Venture Group, a networking organization
for investors and entrepreneurs, with chapters in New Haven, Hartford
and Stamford.
|
Business New Haven
4/6/1998
By: Clement L. Russo
|
How successful has Connecticut been
in attracting venture capital?
A recent survey conducted by Price Waterhouse shows that Connecticut ranks 14th in the nation in the amount of venture capital invested - higher than you'd expect for a state this size - and that funding for high-tech businesses has increased substantially. While those are good signs, the survey also showed that Connecticut ranks fifth as a source of venture
capital, indicating a net outflow. We're making progress in funding technology there's still more money available here than is being utilized.
What sources for investment capital can our technology
companies tap into?
Connecticut Innovations Inc., a quasi-public institution, has been very instrumental in providing seed capital for start-up firms. And there are a good number of private venture-capital firms in the state, though investors and entrepreneurs are not striking deals at the frequency they should. One problem is that they often don't speak the same language or understand each other's needs. While there's plenty of money here, we need better communication between the sources of funds and the entrepreneurs.
Is being based in Connecticut a disadvantage for technology
companies in attracting funding?
Location is not really a significant factor. While it's true that taxes and utility costs are high here, those are not major obstacles for young, high-tech companies. Overall, I'd say there are actually more advantages to being based in Connecticut than disadvantages. Taxes might be lower in Nebraska, but most people would rather live and work here.
What strategies can technology companies use to attract
investors and demonstrate their growth potential?
There's a continuum of development for technology companies - from just having a good idea to having a patent, then a successful prototype, then a production model, then actual sales, and then a profitable business - and the farther along you are, the easier it becomes to obtain funding. Of course, there are a number of other variables involved, like how much competition you face and how much ownership of the business you're willing to share. But my advice to entrepreneurs is to beg or borrow as much money as you can to move your business as far along that continuum as possible before you have to seek venture capital funds.
What resources are available that can help technology
companies in their efforts to attract investment capital?
Besides our own organization, which works to bring entrepreneurs and investors together, another important resource is the Connecticut Technology Council, which acts as a clearinghouse of information for technology companies. I also think it's helpful for entrepreneurs to link up with a lawyer, accountant or other consultant who can act as an interpreter with investors. Sometimes, entrepreneurs don't fully grasp the economic realities of a situation, while investors may fail to understand the entrepreneur's emotional or business concerns. Having someone there to mediate can often make the difference in striking a deal.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
