Attracting bioscience VC to CT

Photo | HBJ File Paul Pescatello, executive director of the Connecticut Bioscience Growth Council.

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By Matt Pilon

Besides academic research, perhaps the most important factor in building a bioscience hub is the presence of venture capital.

Connecticut has some venture capital firms, and Connecticut Innovations invests alongside them in deals, but industry observers say more firms need to establish a beachhead in Connecticut to get the state to the next level.

Paul Pescatello, executive director of the Connecticut Bioscience Growth Council, said a little-known state law passed this year could make a difference.

Public Act 18-147 creates a personal income tax deduction for income generated by investments in Connecticut bioscience businesses. Only general partners of a venture capital fund established in 2018 or later are eligible.

Pescatello said VCs like to be in close proximity to their investments, so the hope is the new law might entice more VCs to set up a Connecticut office and invest in more companies here.

“I'm confident it will have an impact,” he said. “That's where we really lack, is access to indigenous venture capital.”

However, it may not happen right away, since VC investments can take years to pay off, and some VCs might be skeptical.

Pescatello said he's talked up the new law to VCs in Boston and San Diego, and some wonder, given Connecticut's fiscal instability, if the law will still be on the books in 10 years.

“The budget uncertainty makes them think it might not be around,” he said.

CT's bioscience investment support

Of the $40.8 million in equity investments Connecticut Innovations made in fiscal year 2018, 53 percent went to bioscience companies. Here’s CI’s industry investment breakdown:

Bioscience: $21.7 million

Information Technology: $12.7 million

Digital Health: $5.4 million

Other: $1 million

Source: Connecticut Innovations, the state’s quasi-public venture capital arm.