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Reality Check
Bloodied but unbowed, tech firms wave the flag at CII confab
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CONNTACT.COM
10/14/2002
By: Mitchell Young
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Technology companies and their service providers many be down - but not necessarily out, if the turnout October 1 at Connecticut Innovation Inc.'s 12th annual Technology Exhibition & Dinner was any indication. Nearly 1,000 attendees showed up for a program of speakers, awards and some 50 exhibits by companies ranging from newbies looking for capital to service providers like Price Waterhouse Coopers.
Arthur H. Diedrick, CII's board chairman and chairman of development for Gov. John G. Rowland, cited the impressive turnout and support as evidence that all was not lost for Connecticut's tech sector.
Diedrick acknowledged that CII's approach had to be modified given the reality of market conditions.
"With so few IPOs currently, venture investors are being far more conservative,” Diedrick noted. “We're having to take larger [equity] positions in companies that we are funding and having to play a bigger role in supporting our portfolio companies. The will of [venture capitalists] is not gone, but we are seeing lower valuations placed on companies by the venture firms.”
Earlier CII investment successes may be helping the state's technology-investment arm address current needs - not only of the tech companies, but the state itself. "We're not asking the state for any additional funds [for CII's annual budget],” said Diedrick. “In fact, we're contributing $7 million toward the state budget this year.”
CII President Victor Budnick said there were still important success stories to be found among Connecticut technology companies. He cited Cardium Health of Farmington, CYA in Shelton and New Haven's Rib-X as examples.
"Cardium is a success story in the making,” said Budnick. “They have a number of important wins and a stable employment of 25 people.” CYA is becoming a leader in “hot backup" technology and has contracts with the Pentagon and a number of insurance companies.
Biotech start-up Rib-X managed to raise $22 million this year. Budnick also noted that Yale University now has a Bioscience Student Interest Group (BNH, September 30) with more than 700 members.
“When I look back 15 years ago, we had a New Haven tech fund and sent out 3,000 letters to scientists, faculty and students and said we had early-stage financing available,” recalled Budnick. “We got four replies of interest and only one person seriously interested in starting a company - a doctor who wanted to set up a new dermatology practice."
CII presented five technology awards at the dinner. The Distinguished Service Award went to J. Timothy Reilly, managing partner for the Connecticut technology, information, communications and entertainment practice at PricewaterhouseCoopers. Reilly was cited for his assistance to CII in evaluating capital-raising alternatives as well as his support of the organization's annual exhibition and dinner and his past leadership of the Connecticut Venture Group and its annual Crossroads venture fair.
The Job Growth Award went to Proton Energy Systems of Wallingford, a hydrogen generator and fuel-cell company. According to CII, since its founding, Proton Energy has added on average more than 25 jobs annually.
New Haven's Genaissance Pharmaceuticals was cited for Sales Growth in companies with less than $5 million in annual sales, having posted a six-fold increase in 2001. Glastonbury-based Open Solutions earned recognition in the $5 million-plus sales category with a 35-percent increase in 2001. Open Solutions is a provider of data, accounting and Internet services for financial institutions.
George Milne Jr., president of Pfizer's Central Research Division in Niantic, earned a Special Achievement Award for his role in the growth of the bioscience sector in Connecticut as well as helping to establish the state's bioscience “cluster,” or industry group. Webster Bank likewise earned Special Achievement honors for developing financing alternatives including investing in as well as lending to high-technology companies.
Gov. Rowland as well William Taylor, co-founder of Fast Company, a national business magazine, keynoted the event
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