CONNECTICUT INNOVATIONS, INC. (CII), CHAIRMAN OF THE BOARD OF DIRECTORS (CGS § 32-35)

PUBLIC VERSUS PRIVATE VENTURE CAPITAL INVESTMENTS

CII acts as a venture capitalist, investing money in new or existing companies that are researching and developing new technologies. Some schools of thought believe that the state should leave the venture capital market to private investors, who are presumably better at picking new, potentially profitable technologies.

1. What’s the difference between CII and private venture capital organizations? Do they target the same business sectors? How do the terms and conditions for their investments compare? How much return does CII expect from its investments? How does that return compare with that of private investors?

2. Is CII competing with private investors? Whos does a better job at picking potentially profitable emerging?

3. Why does an entrepreneur seek CII funding instead of private funding? What is it about him or his deal that brings him to CII’s door?

Other schools of thought believe that states should enter the venture capital market, but do so in a way that leverages private venture capital, which, according to MoneyTree, increased 6% in Connecticut in 2004.

1. How does the level of private venture capital affect the demand for CII investments? Does the demand increase when venture capital flows dry up?

2. What causes the flow to increase or decrease? How do these changes affect the state’s economy? How do changes in the state’s economic affect the flow?

3. What can CII do to keep the private venture flow even?

4. Should the state create its own $ 100 million seed capital fund, as the Governor’s Council on Economic Competitiveness and Technology recommended?

5. Or, should CII collaborate more with private venture capitalists? For example, CII and The Phoenix Companies jointly manage a $ 15 million fund that invests in early stage technology companies. Should CII add more dollars to this fund?

TARGETING EMERGING TECHNOLOGIES

CII targets “emerging technologies,” which means it must identify, track, and evaluate research that could result in a new product or process. Targeting emerging technologies is riskier than targeting established technologies, which also promise a more immediate return on investment.

1. How does CII identify and track emerging technologies and the companies that develop them?

2. How does it choose the technologies to assist? The state’s economic development plan recommends creating a nanotechnology institute. Does this meet CII definition of an emerging technology?

CII seems particularly focused on biotechnology. It has separate funds for investing in newly formed biotechnology companies and constructing new wet laboratories. It also runs programs that biotechnology careers to middle and high school students. But Connecticut’s biotechnology companies seem to have moved beyond the precarious start-up phase. A recent MoneyTree study suggests that they could attract private venture capital on their own.

1. At what point does CII decide that a technology no longer requires its help? Has biotechnology reached that point?

2. How does CII make that determination?

INNOVATION

Besides investing money in emerging technology companies, CII tries to stimulate innovation—the process through which researchers convert laboratory research into new products and processes. But recent gubernatorial reports suggest that the state must do more to spark and sustain that process.

1. To what extent are the state’s colleges and universities collaborating with each other and with businesses on developing new, commercially viable technologies? Can they do more?

2. How successful has CII’s Yankee Ingenuity Program been at promoting this collaboration? How many businesses did it spin out?

3. To what extent are the state’s public and private colleges and universities promoting entrepreneurship? Have any taken the lead in registering patents or spinning out new businesses?

4. Should CII create small venture capital funds for students to manage?

FUTURE INNOVATORS AND ENTREPRENEURS

CII encourages students to pursue science and technology careers by (1) providing science and technology scholarships and leadership training, (2) sponsoring business internships, and (3) promoting bioscience careers to middle and high school students.

1. Does Connecticut have enough workers with science and technology knowledge and skills to meet the technology sector’s needs?

2. How many scholarship applications does CII receive annually? How many does it deny for lack of funds?

3. What else can the state do to promote science and technology careers?

AGENCY OPERATIONS

CII is one of three economic development agencies—the other two being the quasi-public Connecticut Development Authority and the conventional Department of Economic and Community Development. Each provides a different type of assistance, a fact that could pose problems for clients needing multiple types of assistance.

1. How does CII coordinate its operations with the other agencies? Does it have procedures for referring clients to the other agencies?

2. How does CII’s marketing and promotion efforts complement and support the other agencies?

3. How does CII receive and process requests for assistance? How quickly does it normally respond to a request?

CII’s 15-member board of directors oversees investment and science and technology experts and makes investments based on their recommendations.

1. What is the proper relationship between the board and the staff? Under what conditions should the board overrule the staff?

2. How long do staff members generally remain at CII? Do they use their experience to seek higher paying jobs with private venture capital funds?

3. To what extent does the staff undergo training? To what extent do they pass along their knowledge and expertise to others?

4. How does CII encourage staff to develop new, innovative products and services?

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