May 22, 2017

'Innovation Places' contest draws millions in private investment

HBJ PHOTO | Matt Pilon
HBJ PHOTO | Matt Pilon
Travelers President Brian MacLean says there should be an insurance-technology startup accelerator in Hartford.
HBJ PHOTO | Matt Pilon
Members of the CTNext board of directors listen to an Innovation Places pitch last week at Central Connecticut State University in New Britain. Shown (from left to right) are Matt McCooe, George Mathanool and Hadi Bozorgmanesh.

Two teams made up of well-known Greater Hartford companies, colleges, nonprofits and other institutions last week aired plans to invest millions of dollars in new economic development initiatives with the hopes of winning matching funds from the state's Innovation Places competition.

The competition, created last by the state legislature as part of a broader effort to stimulate Connecticut's entrepreneurial ecosystem by fostering clusters of startups to collaborate with companies and educators, will dole out up to $30 million to teams that develop the most promising job-creation projects.

Last week, two competing Greater Hartford teams — whose participants include Travelers Cos., The Hartford, Stanley Black & Decker, Jackson Lab, Hartford Hospital, UConn, Central Connecticut State University, Goodwin College, Trinity College and others — presented their proposals to the board of CTNext, a quasi-public entity that oversees the program and will choose the winners.

The two plans include establishing specialty startup accelerators, an incubator for later-stage companies, makerspaces, manufacturing and technology programs in high schools and colleges, among other things.

Some projects, like an insurance technology accelerator favored by Hartford's major insurance companies, could happen even without state funding, officials say.

The two area proposals — divided between a Hartford-East Hartford team and a New Britain-Farmington-Berlin coalition — are competing for funding with fellow public-private partnerships in Stamford, Norwalk, New London-Groton, Danbury and New Haven.

The grant pool is sizable, so teams made sure last week to have top officials on hand to display solidarity and buy-in from stakeholders.

In Hartford, for example, several Travelers executives, including President Brian MacLean and Beth Maerz, vice president of strategy and execution, joined Hartford Mayor Luke Bronin and others to pitch their group's plan.

"We really do believe there's an opportunity here within Hartford to build out an ecosystem with corporations that can help develop [startups], provide mentorship, give them opportunity for pilots, in a way perhaps other parts of the country can't," Maerz said.

The Hartford-East Hartford team pitched a nearly $14 million plan that is seeking $6.6 million from the Innovation Places program; the remainder would be funded by mostly cash contributions from corporate, institutional and other investors.

Meanwhile, a competing proposal from the New Britain-Farmington-Berlin team includes $10 million in projects and seeks $3.7 million in public funds.

It's not clear exactly how much money individual companies or colleges are willing to invest.

The Hartford Business Journal submitted a Freedom of Information Act request late last month for all seven team applications, but it was denied by CTNext, which said the full plans aren't publicly available yet because they are responses to a formal request for proposals. When CTNext announces winners, which is expected next month, full details will be revealed.

Hartford focuses on industry strengths

The Hartford-East Hartford coalition plans to focus projects on three core areas: medical technology, insurance technology (InsurTech), and aerospace and advanced manufacturing.

At last week's pitch, the team dedicated most of its time to InsurTech.

Insurers are trying to stay abreast of fast-moving technology trends, from drones to "internet of things," and are exploring tech startups and partnerships that can help them be more competitive and efficient.

"There is both an offensive and defensive play for us," Bronin told CTNext board members. "Our goal, to put it boldly, is we want to once again be the undisputed insurance capital of the world. That's going to mean we need to position this city to be the center of innovation in the insurance industry."

The proposed InsurTech accelerator would cost an estimated $4.5 million over the next three years and organizers — unwilling to wait for the competition to play out — are already looking for an accelerator operator.

Several well-known organizations — including Silicon Valley's Plug and Play Tech Center, Colorado-based Techstars, MassChallenge and Washington, D.C.-based 1776 — have already expressed interest in running the accelerator, according to Michelle Cote, managing director of the Connecticut Center for Entrepreneurship and Innovation at UConn, who is coordinating the Hartford-East Hartford group.

MacLean said Travelers, which has 7,000 Greater Hartford employees, is focusing heavily on digital innovation for its business, which can be supported by the accelerator.

"I can assure you, at the top of our strategic agenda, is talking about innovation technology, and digital strategy," MacLean said.

Devi Mohanty, head of strategy, innovation and strategic ventures at The Hartford, said the property-casualty insurer, like Travelers, has been using drones to assess damage claims, and is also studying healthcare technology that could get injured workers back on the job more quickly to reduce worker's compensation claims.

"Technologies are changing the landscape of the entire value chain," Mohanty said.

One innovation consumers can expect to see more of is the use of a technology that tracks driving habits in order to set insurance rates.

Travelers' Maerz said the insurer is rolling out the next generation of the voluntary technology as a mobile phone app, which they started developing two years ago with a technology partner.

"I would say, since then, we've probably seen 15 other players enter the marketplace," said Maerz, who predicted car manufacturers will eventually build tracking devices into vehicles. "So the pace of change … we think that's going to continue to increase."

The largest piece of the Hartford proposal is a $5 million investment in medical technology, including a healthcare startup incubator at Hartford HealthCare's Center for Education Simulation and Innovation.

East Hartford is also hoping CTNext will commit $655,000 for aerospace and advanced manufacturing programs, including high school robotics competitions and technical assistance for manufacturers.

New Britain's proposal

The pitch from the New Britain-Farmington-Berlin team includes five specific projects, the largest of which is an incubation center for second-stage companies.

Officials hope the space, which may be located on Stanley Black & Decker's vast New Britain campus, would be the first of its kind in the state and serve as a place where UConn's incubator companies could move as they grow.

"There is a need for medium to large wet lab spaces in the state of Connecticut as some of our companies graduate the [incubator] program but are not yet at the commercialization stage," said Paul Parker, director of UConn's tech incubator program.

Stanley has partnered with developers who want to redevelop some of the toolmaker's older New Britain campus buildings. Plans include construction of a high-end data center that would be powered by fuel cells, but the project has been in limbo since late last year when the state declined to award it a long-term energy contract.

The New Britain proposal also calls for expanding local tax benefits for entrepreneurs; $1.6 million in student loan forgiveness to encourage workers to live in the area; establishing entrepreneurial and manufacturing academies for middle and high school students; and applying for additional public transit routes, including to the Berlin and Meriden train stations.

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