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January 24, 2024

Lamont admin. plans to consolidate innovation investor CTNext into state agency; $450K lined up for employee severance

CTNext Executive Director Onyeka Obiocha (center) with Dan O’Keefe (right), acting commissioner of the Department of Economic and Community Development.

The General Assembly created the quasi-public economic development agency CTNext in 2016 with the aim of investing in and boosting innovative startups capable of growing jobs and building economic vitality.

Now, the Lamont administration wants the much larger state Department of Economic and Community Development to absorb CTNext, a move that would come with a workforce reduction.

A request to fold the functions of CTNext into the DECD will go before state lawmakers in the coming session, said Daniel O’Keefe, who is the acting commissioner of the DECD while awaiting confirmation by lawmakers.

CTNext is currently a subsidiary of Connecticut Innovations, another quasi-public agency that serves as the state’s venture capital investor.

CTNext was created as part of a larger effort to create “Innovation Places” around the state, particularly in cities.

Its mission was to accelerate startup growth by providing access to talent, space, industry expertise, services, skill development and capital to foster innovation and create jobs in Connecticut.

CTNext has traditionally received its funding through state bonding. The consolidation will shrink the organization and shift its budget into DECD’s operations.

In 2021, the state legislature authorized $64.2 million in general obligation bonds over five years to fund CTNext’s operations.

However, funding for CTNext has not found its way onto state Bond Commission agendas for three years, O’Keefe said. That’s a necessary step to turn that legislative authorization into actual cash.

“I think the work matters, and I think the DECD is the right place for the work to continue,” O’Keefe said. “CTNext was set up legislatively to be a subsidiary of Connecticut Innovations. The goal would be to work with the legislature to fold it into DECD and have it form the nucleus of what will be the Office of Innovation out of our agency.”

Barring that, O’Keefe said, he’s not certain how CTNext’s operations will be funded.

O’Keefe joined the Lamont administration last July, originally in a newly created chief innovation officer role within DECD.

He was named acting commissioner following the recent departure of former DECD Commissioner Alexandra Daum, who has taken a community development post at Yale University.

O’Keefe said a newly created Office of Innovation will continue the work of supporting startups, and function much like the Office of Manufacturing, which was created by the Lamont administration in 2019, and is currently led by former manufacturing executive Paul Lavoie.

Severance pay

CTNext’s board of directors on Jan. 23 approved setting aside $450,000 for staff severance packages.

O’Keefe said he imagines four or five of CTNext’s 11 full-time staff members will join DECD after the consolidation. Some staffers would not make the transition because their roles would be fulfilled by existing DECD employees, he said.

It’s not clear how much money the state will save with the consolidation.

O’Keefe said CTNext was originally envisioned to foster the creation of physical spaces for collaboration and innovation. After the COVID-19 pandemic, however, the mission crept heavily toward supporting networks and programs.

The Lamont administration believes that work is important, O’Keefe said, but it doesn’t want to borrow money to fund those efforts.

Attempts to reach a CTNext representative were unsuccessful. The organization’s executive director is Onyeka Obiocha, who was named to the role in 2022. Obiocha is paid $196,905 in salary and wages, according to the State Comptroller’s Open Payroll database.

CTNext’s board of directors, on Jan. 23, also voted in a new chairman, David Steuber, previously chief of staff to former Hartford Mayor Luke Bronin. Steuber spent more than a year as a senior program manager at Connecticut Innovations, before joining the Bronin administration in 2021.

Part of Steuber’s task is to help with the transition.

‘Sustained path’

It wasn’t immediately clear how much state funding CTNext has received since its 2016 inception. Its programs included pitch events that awarded winning startups prize money.

For example, Monroe-based wearable medical device maker Elidah won $20,000 at CTNext’s first mentor network pitch event.

CTNext also reportedly awarded $54,000 to five startups during a 2022 Entrepreneur Innovation Awards event.

CTNext also supported the creation of a new venture fund with the intention of financing early-stage startups led by women and minorities.

O’Keefe stressed the aim is to continue CTNext’s contributions through a “sustainable” funding mechanism.

“I look at this as an initiative we incubated outside of government,” O’Keefe said. “And now what we are looking to do is take the parts that worked, and worked well, and bring them into government and set them up on a sustained path.”

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