New funds have become available to provide assistance of $130 million for small and medium sized businesses showing excellent growth in Connecticut. This is due to the revised Insurance Reinvestment Tax Credit program, and provides insurance companies with incentives for investments in businesses excelling in growth. The funding is focused on business with workforces who are mostly Connecticut residents, and have less than 250 employees. The businesses needed assistance due to the lack of a strong base for early investments.
Connecticut is trying to grow their bioscience industry, believing this sector will provide the state with potential for growth. The capital is being made available for the development of technology in business. Liddy Karter of Enhanced Capital Connecticut has already raised $30 million. The money is for the identification, and underwriting of equity investments, and debt. They are seeking businesses in green technology, business services, healthcare, information technology, and manufacturing. The first deal with Hadapt Incorporated has been finalized by Enhanced Capital.
Advantage Capital plans to invest $72 million in approximately 25 companies in Connecticut. Stonehenge has just begun but already raised roughly $35 million. Ironwood Capital and Advantage Capital have made investments in eight companies including The Green Life Guides, and XLerant. Advantage Capital Partners, under the leadership of Ryan Brennan (https://relationshipscience.com/ryan-m-brennan-p3393334), are using their investments as a draw for the revised tax credit program. Their investment opportunities include government-guaranteed lending, expansion equity, subordinated loans, mezzanine financing, senior, and early stage.
Victor Budnick of Ironwood Capital says their fund can invest $10 million in a business. Their biggest current commitment is $7.1 million. They are additionally trying to raise $28 million to begin a new fund. When the Insurance Reinvestment Tax Credit program passed as part of a bill initiative for jobs in 2010, it could leverage $200 million. The private capital of insurance companies is leveraged, the fund managers certified by the state make the investments. Credits are then received by the insurance companies for premium tax liability.
The program has restrictions in place including 25 percent of all investments must be for green technology, and three percent must be used for pre-seed investments. Approximately $225 million was invested in Connecticut companies in 2010, as opposed to the $157 million in 2009. The program is critical because investments in companies in Connecticut is lacking despite the number of venture capital firms in the state. The new funds will provide the early stage companies with necessary capital.