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Connecticut venture funding drops sharply in 2018

January 3, 2019

Venture funding dropped 45 percent in Connecticut last year, despite a surge nationally in corporate profits that has emboldened companies to spend, including on acquisitions that represent a major source of venture capital returns.

More than two dozen Connecticut startups reported $63 million in funding in the fourth quarter of 2018, double the total of the immediately preceding quarter and well above the final three months of 2017 as disclosed in Securities & Exchange Commission filings tracked by Hearst Connecticut Media and other public documents.

For the full year, however, startups secured just $220 million in funding across 80 deals, with the New Haven-based cancer drug startup Arvinas landing a quarter of that amount in advance of a September initial public offering of stock.

The statewide totals were down from $400 million in 2017, which represented a 19 percent increase from the year before. By contrast, in October the National Venture Capital Association stated the United States was on pace for a record year in venture funding, based on projections by Pitchbook.

Gov.-elect Ned Lamont has pledged to focus on spurring the formation and success of homegrown companies in hopes of finding the next Priceline or Bridgewater Associates as a way to reinvigorate Connecticut’s growth. In addition to his own experience running a campus cable services company, the governor-elect’s spouse Annie Lamont is an experienced venture investor with Oak Investment Partners in Norwalk and Oak HC/FT in Greenwich.

Incentives for startups?

In the days after the election, Lamont suggested he would be more selective in awarding big incentives to lure major employers to the state compared to Gov. Dannel P. Malloy, who had some successes with his “First Five” program including the headquarters moves to Stamford of Charter Communications and NBC Sports.

Last month in Middletown, Malloy touted his own efforts to build an ecosystem in Connecticut to provide entrepreneurs support and financing, particularly in the growth of innovation hubs in cities statewide. In November, the state-backed Connecticut Innovations venture fund announced nearly $4 million in support of a Hartford business accelerator focused on “smart” buildings, including those designed for senior communities.

Branford-based IsoPlexis led all Connecticut startups by securing nearly $20 million in a third round of venture capital led by Bethesda, Md.-based Northpond Ventures, with the goal of padding that amount by $5 million more.

A spinout of Yale University and the California Institute of Technology and backed by the Connecticut Innovations venture fund, IsoPlexis sells machines that help pharmaceutical researchers measure protein secretions as a way to glean better data in support of clinical trials.

Another 14 companies reported raising amounts between $1 million and $7 million, to include several in southwestern Connecticut. Wilton-based Cadenza Innovation reported $3.3 million in fresh funding during the quarter, with the company developing lithium ion batteries at a Bethel lab with a modular design for use in electric vehicles or even power plants.

In South Norwalk, Shibumi secured $3.8 million with an online dashboard that allows business managers to consolidate on a single screen information myriad spreadsheets and other applications. And LesserEvil secured an initial tranche toward a planned $6 million round of funding to finance the expansion of its Danbury plant where it produces organic popcorn, chips and other snacks.

Alex.Soule@scni.com; 203-842-2545; @casoulman

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