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September 2, 2013 Startup Helping Startups

CTNext experiment casts entrepreneurial web across state

Photo | Pablo Robles Entrepreneurs recently gathered at a Hacker's Day event in Stamford to share ideas about growing their fledgling companies. Events like these are popping up across Connecticut as part of an effort to encourage start-up firms to grow in the state.
Photo | Pablo Robles Entrepreneurs prefer a casual work environment when they are sharing ideas. During a recent Hackers Day event in Stamford, entrepreneurs are encouraged to grab a beer before they start to collaborate.
Photo | Pablo Robles Serial entrepreneur Eric Knight is helping run incubator space in Storrs and Groton.
Photo | Pablo Robles

With the state lagging behind in job recovery, Connecticut officials in the months following the 2008 recession weren’t bullish on the state’s entrepreneurial prospects.

Urged by business groups like the Connecticut Technology Council and Connecticut Innovations, which needed only to look north or south to start-up hotbeds like Cambridge or New York City, policymakers  decided the state needed a new approach to develop an innovation economy.In the 2011 Jobs Bill, the legislature set aside $5 million to fund a network of business consultants, incubators and a pool of innovation vouchers, that is just now starting to gain traction, although its effectiveness is yet to be decided.The “CTNext” experiment — the moniker that encompasses the effort — focuses on fostering startups and somewhat further along stage-two companies. It has given rise to state-subsidized incubators in Hartford, Storrs, Stamford, Westport and New Haven.A team of growth advisors tied to each location was hired to work with companies that seemed particularly promising.The centers can walk an entrepreneur through the application process for vouchers — which can be used for prototyping, market research and intellectual property services — that top out at $10,000.That network of providers has now worked with, in some capacity, more than 600 startups and granted $307,000 worth of vouchers, according to the state Department of Economic and Community Development (DECD).As both providers and entrepreneurs tell it, CTNext has been a positive step in building a start-up industry. But it’s still difficult to assess any return on investment for the public dollars funding it.Some have also raised concerns that the effort lacks a centralized focus. Opening incubators across disparate parts of the state, critics warn, separates entrepreneurs who should be sharing ideas.Regardless, CTNext has helped entrepreneurs like advertising executive Carissa Ganelli, founder of software startup LightningBuy, which makes it quicker and easier for consumers to make online purchases using their mobile phones.Through a chance encounter in Manhattan with Patty Meagher, entrepreneur and founder of the Stamford Innovation Center, Ganelli found CTNext.LightningBuy, which launched its product in February, is now housed at the Stamford center, paying a reduced rent of $500 a month thanks to state money the center gets through a CTNext provider contract. Five facilities around the state have similar contracts.Ganelli’s company has also received some free legal and accounting services.That’s all been vital to keeping LightningBuy’s operations running lean. But what’s been most important, Ganelli says, is tapping into a pool of knowledge about other state grants through DECD.LightningBuy, for example, was awarded $30,000 from the Connecticut Center for Advanced Technologies, and later got another grant from DECD.Ganelli said Stamford center officials put in a good word for her at the state level, which she believes led to her company getting an award.“We were really lucky,” she said. “It helped us pay bills, develop our alpha and refine our beta.”Ganelli wouldn’t disclose if her company is profitable, but she said the free and discounted services she’s gotten from CTNext has made her feel more loyal to her home state. She says she’ll likely stick around if, or when, LightningBuy, with its six full-time employees, grows.

A growing network of connections

CTNext hopes its website and any buzz it creates will help spread the word to entrepreneurs like Ganelli about its services. Networking has been just as vital.

Like Ganelli, Jason Maloney, co-founder of Fairfield iPhone case maker diffr3nt, stumbled upon CTNext through a chance encounter.Last September, Maloney was waiting in line at an Apple store to purchase the iPhone 5, which he and his business partner Mark Donne needed as quickly as possible to build a prototype case that fit its dimensions.Maloney bumped into Derek Koch, CEO of Independent Software and a growth advisor in New Haven’s CTNext network.Koch introduced the differ3nt founders to CTNext’s programs and services, including a CEO bootcamp, which helped sharpen the entrepreneur’s leadership and management skills.Diffr3nt is also applying for an innovation voucher.Maloney didn’t disclose how many cases diffr3nt produces, but he said the company’s sales are funding its operations.He recently left his job at a major tech company to pursue diffr3nt’s future full time.“As an entrepreneur in Connecticut, there are so many resources out there,” Maloney said. “Instead of going to 27 different doors and asking for help, CTNext is the one door I go to, and they know everyone behind those 27 doors.”

Serial entrepreneur sees value

Eric Knight has been building companies for years. The UConn alum founded Fairfield’s UP Aerospace, which in 2007 launched Star Trek actor James “Scotty” Doohan’s ashes into space on a private rocket.

Knight is now entrepreneur in chief of Innovation East, the CTNext region that includes incubator space in Storrs and Groton, and is affiliated with UConn. Knight and his team have worked with more than 100 companies so far, he said.For Knight, one of the most important things CTNext has accomplished is creating a tighter network of entrepreneurs like himself.Getting better acquainted with people around the state has helped Knight have a better sense of which combination of advisers might be best to help entrepreneurs.“This is a really remarkable team across Connecticut,” he said.And it’s a fledgling team. In describing CTNext to a newcomer, Knight often calls it “a startup helping startups.”Matthew Nemerson, president and CEO of the technology council, said the idea all along was to try different things and go with what works.He said the tech council, Connecticut Innovations, and the innovation centers have been comparing notes about results so far, and talking about what seems to be most effective.One thing that Knight said is working better is his center’s process for vetting voucher recipients. A board of reviewers hears entrepreneur pitches at a monthly gathering.The board can grant a voucher on the spot if the pitch passes muster.“We really hit our stride with the processing,” Knight said.Knight said developing those types of standards is vital, especially as the program approaches its second round of contracts. CI sent out a request for proposals last month for service providers to represent the second year of the CTNext program.About $5 million is expected to be up for grabs.Nemerson hopes the results will build on what’s been done so far.“We need to maintain the statewide relationships that have been created, build on the actual experiences of helping companies, and be very analytical about what happened and why,” he said.DECD will have an open mind to proposals and ideas as the second round of RFPs roll in, said Commissioner Catherine Smith.Smith said the number of companies formed, and the number that survive, will be key metrics to measure as the program continues.“It still feels like it’s pretty fledgling,” Smith said. “The first year has barely moved the needle, but we’re moving in the right direction.”Though CTNext will receive another round of state funding in its second year the idea in the long run is for the effort to sustain itself, Smith said. That’s something that has been communicated to the various players involved in the effort.“We have large companies that are interested in innovation and they can help participate,” she said.

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