Finance, Revenue and Bonding Committee
JOINT FAVORABLE REPORT
AN ACT CONCERNING INNOVATION, ENTREPRENEURSHIP AND CONNECTICUT'S ECONOMIC FUTURE.
Joint Favorable Substitute
SPONSORS OF BILL:
Finance, Revenue and Bonding Committee
REASONS FOR BILL:
In an effort to foster startup businesses and develop an entrepreneur community in Connecticut this proposal establishes a new entity within Connecticut Innovations (CI) called “ImpaCT” which is charged with developing and implementing a number of new initiatives.
RESPONSE FROM ADMINISTRATION/AGENCY:
Benjamin Barnes, Secretary Office of Policy and Management
Secretary Barnes submitted testimony in opposition of SB 1. Secretary Barnes recognizes the positive intentions of this bill, however voices his concern about the fiscal impact of this bill given the state's current economic status. The Secretary explains that the new tax credits and additional bond expenditures included in the bill should not be entertained due to the poor status of our state's finances. Currently, it is his belief that the state has limited revenue and a growing need to cancel existing bond authorizations because of these revenue limitations.
NATURE AND SOURCES OF SUPPORT:
Jeffrey P. von Arx, President of Fairfield University
President von Arx submitted testimony in support of SB 1. It is his belief that as a result of this bill ImpaCT will be an important resource to advance entrepreneurial endeavors and bring a new sense of economic vitality to Connecticut. He began his testimony by explaining that this bill seeks to support higher education institutions in Connecticut and that Fairfield University would welcome the opportunity to further coordinate with the state in order to increase transparency and form a stronger partnership within their region. His testimony also described Fairfield University's business incubator called “FUEL”- Fairfield University Entrepreneurship Lab. Since FUEL was established, 10 companies have used the space, resulting in 20 jobs and over $500,000 in fundraising and investments for the University. Because of FUEL's continued success, Fairfield's economy is in greater need for businesses and employees. The President revealed that Fairfield University has plans to expand in the future by building new academic buildings and implementing new programs across all focus areas.
Joanne Berger-Sweeney, President of Trinity College
President Berger-Sweeney submitted testimony in support of SB 1. Ms. Berger-Sweeney begins her testimony by explaining that she is a new resident to Hartford as of 2014, and that the city could learn from the recent transformation that Boston has undergone. These lessons include a concentrated effort into innovation districts, where like-minded people can be in close proximity. She then explained that institutions of higher learning are the foundation of a knowledge-based economy, when production is based on a greater reliance on intellectual capabilities rather than on physical inputs or natural resources. She provided an example of a Trinity College student who created an app that allows students to buy and sell each other textbooks, showcasing the type of intellectual capital and innovation that higher education institutes can provide to the state. Ms. Berger-Sweeney expressed her support for SB 1 by explaining that the bill has many initiatives and funding opportunities that can help the creation of a multi-institutional governing body which is focused on creating an environment for research, teaching, workforce development and business development. She continued by saying that SB 1 acknowledges the positive impact colleges and hospitals have on the communities in which they are located, and that these institutions often have many shared academic development partnerships which this bill could help expand. She lists the establishment of an investment fund that supports start-up companies created by students and the creation of knowledge center enterprise zones surrounding an higher learning establishment as further reasons for her support of this bill as they will be critical to the retention of young entrepreneurs in the state as well as provide incentives for strategic coordination between educational and medical establishments.
Connecticut Association of Smaller Manufacturers (CASM)
CASM submitted testimony in favor of SB 1. CASM began their testimony by recognizing the positives and negatives of the bill, starting by listing the positives as follows: continued funding for Small Business Express and the Manufacturing Innovation Fund, grants for facilities renovation in innovation districts, bonded funding for evening classes at the technical schools, extension of the angel investor tax credits, and funding for publicizing manufacturing awareness and developing 1000 manufacturing workers. The main concern CASM has with SB 1 is our state's current financial infrastructure. They believe that ImpaCT is only a short-term fix that is unsustainable without first addressing the high tax rate and housing costs that force workers to leave Connecticut. It is CASM's recommendation that the legislature focus on the Small Business Express and Manufacturer's Innovation Fund programs as they are efficient and accessible resources to business owners. CASM further believes that the state should establish a partnership with current businesses and technical high schools to provide training opportunities that will lead to better paying jobs in the future. These efforts should focus on the designated communities outlined by the Manufacturing Innovation Fund legislation according to CASM. Lastly, CASM voiced their opposition to Section 28 of SB 1 and they recommend a new host for “Dream It-Do It.” This host should have education-related knowledge and infrastructure to build a partnership amongst students, educators and manufacturers. CASM suggests bringing the students to the manufacturers so they can be exposed to real-world manufacturing and personnel, which they believe will stimulate interest and demand for jobs in this sector. In conclusion, CASM recommends that the state abandon the ImpaCT concept and instead consider using the state's business community as the starting point for a student/faculty research initiative.
Jennifer Widness, President of Connecticut Conference of Independent Colleges
Ms. Widness submitted testimony in favor of SB 1 expressing her belief that the proposal supports Connecticut's higher education institutions work to promote innovation and entrepreneurship among students and faculty in order to foster economic growth in the state. She further expressed her support by explaining that SB 1 seeks to facilitate stronger relationships between CT businesses and colleges to support entrepreneurial research and talent development, and also establishes an investment fund for student-owned start-up businesses. Ms. Widness points out that many of CCIC's member institutions are hosts to entrepreneurial centers that offer courses that promote entrepreneurship. She cites Fairfield University's FUEL program which has launched 10 companies resulting in 20 jobs and over $500,000 in investments and fundraising since its inception in 2013. A state-wide effort to support programs like this would lead to stronger and more developed centers for innovation. Also, these student-led start-ups that are spawned by the entrepreneurial centers are often lacking in access to funding and incentives to stay and prosper in Connecticut. Ms. Widness believes that support from ImpaCT or Connecticut Innovations would be helpful in identifying, developing and establishing innovation ventures with new and interesting business propositions. She also supports the establishment of the state-wide technology transfer office within SB 1, believing that it would provide technical assistance to help usher innovative ideas into the marketplace. According to CCIC this could also connect businesses to faculty and students at institutions in order to stimulate more collaborative research and could also accelerate commercialization of technology at Connecticut's smaller colleges and universities by engaging students and faculty and urging them to work with their private sector partners.
Dr. Susan Froshauer, President of Connecticut United for Research Excellence, Inc. (CURE)
Dr. Froshauer testified in favor of SB 1 by exclaiming CURE's specific support for Section 24 of SB 1 concerning “the reauthorization of the Angel Tax Credit and its transferability.” She believes that the implementation of the Angel Tax credit is in the best interest of Connecticut's thriving bioscience industry. According to CURE this proposal supports the public by spawning the formation of new companies, creating jobs and developing new innovations in the health care field. The Angel Tax Credit stimulates access to sources of capital that enable biotech entrepreneurs to pressure test and de-risk their ideas at their inception. Dr. Froshauer believes the Angel investors are motivated by this tax credit to take early investment risks which are essential in discovering new advances in the medical field. She continues by saying that as these new ideas are de-risked, their value increases and this creates opportunity for start-ups to engage in conversations with investors who are looking to invest large sums of capital in new and lucrative business ventures. She also believes that the $2 million start-ups may receive from angel investors is a sufficient sum and promotes the formation of the best companies with the most cutting-edge ideas and irreplaceable talent. Dr. Froshauer believes it is important for angel investors, in the bioscience field, to form syndicates with Boston and New York associations where there is a larger flow of capital and more people looking to make investments. Lastly, Dr. Froshauer believes that this bill will attract venture capital investor's form outside our region to invest in the companies and talent that reside in Connecticut.
Brian Kench-Dean of College of Business University of New Haven; Ronald Harichandran-Dean of Tagliatela College of Engineering University of New Haven
Both Dean Kench and Dean Harichandran submitted testimony in favor of SB 1 stating that the University of New Haven's College of Business and College of Engineering would welcome the opportunity to partner with the state in order to build a more collaborative, comprehensive and competitive Entrepreneurship and Innovation program. They explained that their comprehensive entrepreneurship and innovation program will engage students at all stages in their academic enrichment, will offer career-long engagement to its students and supporters, will have a commitment to research, and its academic foundation will be based on case studies, guest lectures and internships. They further state that their collaborative entrepreneurship and innovation program will focus on interaction amongst students and faculty, as well as local businesses in an effort to provide students with the tools necessary to foster their leadership skills. The competitive entrepreneurship and innovation program will engage students in business plan contests, business development support contests, pitch contests, and the annual Hult prize competition. They close their testimony by noting that ImpaCT will be an important tool in advancing entrepreneurship and innovation at the University of New Haven as well as the rest of the state.
Louis Manzione, Dean of College of Engineering, Technology, and Architecture at the University of Hartford
Dean Manzione submitted testimony in support of SB 1 noting that SB 1 will help further the University of Hartford's effort to promote innovation and entrepreneurship amongst its students, while also spawning economic growth in Connecticut. While UHart is already engaged in programs that support entrepreneurship and innovation, they would welcome the opportunity to coordinate their efforts with the state in order to elevate the visibility of their work and to form a stronger partnership with the state. The Dean continues to explain his support for SB1 is bolstered by the university's quest to help the state's economy. The University is seeking to continue to grow a partnership with the state that aligns their programs with the needs professionals and companies throughout the state. He also explained that the university needs resources to encourage entrepreneurship amongst their students so that their graduates will work at leading companies and create new and exciting innovations. It is his belief that SB 1 will provide the university and more importantly its students with those resources.
Deborah MacDonnell, Connecticut College
Ms. MacDonnell submitted testimony in support of SB 1. Connecticut College recognizes and supports SB 1's mission to foster economic growth in the state by supporting innovation and entrepreneurship in CT's higher learning institutions. Ms. MacDonnell explains that Connecticut College is already ahead of the curve concerning encouraging entrepreneurship amongst their students, ranking number 16 on Forbes list of America's Most Entrepreneurial Colleges. In the future, Connecticut College plans to expand their entrepreneurial studies by implementing new curriculum that seeks to make even more connections and will include entrepreneurship as a focused pathway to success. The school will also seek to foster more effective student experiences by pursuing future partnerships with businesses as well as not-for-profit organizations within the state. Connecticut College believes ImpaCT can be an important resource in their attempt to advance entrepreneurial endeavors and bring a sense of economic vitality to the state.
Neil Albert Salonen, President of the University of Bridgeport
President Salonen submitted testimony in favor of SB 1 noting that he welcomes the opportunity to coordinate with the state to elevate the visibility of the work they have already accomplished and to form stronger partnerships within the Bridgeport area. He explained that the University of Bridgeport has a program in place, which is a partnership between Connecticut Innovations and the University that assists in commercializing new technologies, creating jobs and fostering economic development. Mr. Salonen believes that SB 1 is consistent with their already existing program and will only improve the university's efforts.
Dr. Jeffrey R. Seemann, Vice President for Research, University of Connecticut
Dr. Seeman submitted testimony in favor of SB1, which in his belief recognizes that universities play a key role in economic competitiveness and growth for the state. It is his belief that at the urging and with the support of state government, universities have emerged as economic drivers in highly prosperous regions by linking the practical needs of the industry to academic research interests. He further explains that Senate Bill 1 compliments UCONN's NexGenCT, a ten year plan to expand science, technology, engineering and math (STEM) capabilities at UCONN. Due to substantial increase in research awards between FY13 and FY 15, UCONN has increased CT's STEM-related trained workforce, and are also building expertise and new technology resources required by CT's many high technology companies. The investment of BioScienceCT located at UCONN Health is paying similar dividends. As a result of the success of these two programs, it is in a very good position to expand the pipeline and attract out of state companies and impact on emerging needs of existing firms as well. Dr. Seeman stated that SB 1 will allow UCONN to enhance and expand their efforts pertaining to technology commercialization capabilities. He explained that over 500 patents have been issued; however, none of them will be of value if they don't have the personnel nor the financial capacity to make the intellectual property attractive to industry, investors and other partners. SB I strives to replicate the same innovative model that has been applied in other successful states. Dr. Seeman concluded his testimony by stating that SB 1 will allow UCONN to continue their efforts to start new businesses, create employment opportunities, and keep Connecticut companies competitive.
State Senator Martin M. Looney- President Pro Tempore
Sen. Looney submitted testimony in support of SB 1 detailing Connecticut's rich history of inventions and innovation in the technology industry. Connecticut's outstanding higher learning institutions could be vital in creating these new advances, but according to Sen. Looney the state must form entrepreneurial startup companies in order to truly advance our state. Sen. Looney expressed his concerns that CT has fallen behind in its formation of new business establishments and has also seen the age distribution of Connecticut employees shift to an older age. It is his belief that state government cannot exclusively spawn entrepreneurial progress, but it can be a constant partner in doing so. Sen. Looney supports the ImpaCT program component of SB1 noting that he believes it will help to coordinate state activities concerning entrepreneurship and innovation. He also believes that Connecticut Innovations is the backbone of the state's support for startup communities and that StartupCT administered by CI will take support of start-ups in Connecticut to the next level by continuing to evaluate and enter investments with CT start-ups. The Senator also proposes instituting a performance-based pay at CI, and requiring every CI deal to include a private partner—to ensure offers are competitive and to attract new private capital to the state. Sen. Looney also expressed support of the innovation districts the bill creates, noting that they provide a great opportunity for colleges, hospitals, and local businesses to come together and collaborate on ideas to create improvement and growth in their community. Sen. Looney's testimony also discussed the Intercollegiate Tech Transfer office component of the proposal, which is charged with providing patenting, licensing and commercialization support services to public and private colleges in CT who don't currently have these resources. He suggests that this service will unleash the potential of researchers and possible entrepreneurs at higher education institutions across the state, which would help keep young entrepreneurs in Connecticut.
Beverly Dacey, Amodex Products, Inc. and Board member of the Manufacturing Innovation Fund (MIF) and Board member of New Haven Manufacturers Association (NHMA)
Ms. Dacey submitted testimony in support of SB-1 and provided as requested a copy of MIF's 2015 inaugural year Annual Report. She requested consideration of the removal of both Business Express and MIF from the bill as they are well-established programs providing valuable resources to manufacturers utilizing parallel resources in meeting their growth initiatives. She also stated that the board is already working on strategic planning for the second and third year, with a focus on prudent and responsible fiscal management, in its efforts to continue addressing the state's labor shortage and manufacturing growth challenges.
Rupendra Paliwal-Sacred Heart University
Ms. Paliwal submitted testimony in support of S.B 1, wishing to synchronize the goals of S.B 1, with those of Sacred Heart University (SHU), the State, the business community, and colleges and universities throughout CT alike. According to her, SHU has already been working on innovation and entrepreneurship throughout its student body and faculty. In doing so, SHU has begun working with regional employers, organizations, and municipalities through “marketing research and forecasting, on-the-job training, job shadowing, environmental restoration and preservation and multiple collaborative learning opportunities.” She explained that the objective of SHU is to provide opportunities through its five colleges (Business, Health Professions, Nursing, Arts & Sciences and Education) for its student to become integrated within the community. It is her belief that SB1 helps expand the ability for institutions of higher education to continue to encourage students to become part of their community and at the same time create economic growth in Connecticut.
NATURE AND SOURCES OF OPPOSITION:
Suzanne Bates, Policy Director for the Yankee Institute
Ms. Bates submitted testimony in opposition of SB 1 stating her concern that this legislation creates another entity that has the power to borrow money, when the responsibilities given to ImpaCT could be easily performed by state agencies that already exist, in particular the Department of Economic and Community Development. Ms. Bates continued by saying that because the state's economic future is uncertain, it may prove unwise to create a new agency which would be supported by borrowed money or taxpayer dollars. She believes that the creation of “Innovation Districts” picks winners and losers among Connecticut's municipalities. Instead of the state spending more money and creating new layers of government, Ms. Bates believes, we should look for ways to create a more open and free society. Furthermore, Ms. Bates explained that many small business owners are frustrated because they feel that the state is standing in their way of growing their business and they would like the state to be more predictable, accessible and have a sense of cooperation when dealing with small businesses. She also expressed that past economic programs designed around “handouts” to new businesses have not encouraged economic or developmental growth and that the private sector is better equipped for lending money to businesses when needed and can better determine if an entity has a good business plan. Ms. Bates concludes her testimony by exclaiming that there is a better way to encourage economic growth in CT and that is by reviewing how existing regulations and taxes are inhibiting job growth and making then making appropriate changes after such an analysis is complete.
Kris Lorch, President of Alloy Engineering Company
Ms. Lorch submitted testimony, claiming she will not support SB 1, until there are modifications to decrease the spending of Connecticut's revenue. It is her hope that the bill be intertwined into the Connecticut Innovations platform since in her opinion the state does not need another quasi-public agency. Ms. Lorch goes on to state that the Manufacturing Innovation Fund (MIF) should not have its $20 million dollars stripped from them by the legislature, in order to be re-directed, unless given approval by the MIF. Furthermore, she believes the money appropriated to the Dream it Do it program should be held, until the legislature has properly and effectively reviewed the value of the program.
Reported by: Caleb Pulda-Rifkin