Startups Are Knockin’ On Connecticut’s Door

The good life is luring entrepreneurs to the state. And Matt McCooe, CEO of the state’s venture capital arm at Connecticut Innovations, is ready to woo them. By Paul Ust.

The state of Connecticut, Archie Group’s home base, is a growing hub for startups and entrepreneurs looking for the perfect place to launch. In 2020 Connecticut ranked No. 4 in Bloomberg’s U.S. State Innovation Index behind California, Massachusetts and Washington.

Matt McCooe, CEO of Connecticut Innovations

What’s driving the boom is a lower cost of living and high quality of life, says Matt McCooe, CEO of Connecticut Innovations, the state’s venture capital arm at the forefront of backing Connecticut’s most promising early-stage companies. McCooe spoke with Archie Group about the hot sectors coming into Connecticut—life sciences, greentech—and how they’re working hand-in-hand with the state government to fuel even more growth. This conversation has been edited for length and clarity.

Archie: Why are young companies now seeking out Connecticut over more established startup hubs?

Matt: During Covid, Connecticut benefited from migration from New York City and other places. We had people come out here working remotely and ask themselves: Why should I be based in New York when I’m only going to be there once a month? And why should I pay New York City or San Francisco rent for my business? We’ve seen a net migration of 20,000-plus people move into Connecticut. One of the measurements we look at is job growth in the state and in our portfolio. While we may not be seeing an increase in employees in a single office, we’re seeing an increase in entrepreneurs or investors who want to live in Connecticut. These entrepreneurs are opening businesses here and creating an opportunity for Connecticut Innovations to support and invest in their companies. That trend has accelerated since March 2020, and the increase in the price of housing in these secondary markets supports it.

Archie: How has the business view of Connecticut changed over the decades, back when Connecticut was famously called the “Gold Coast”?

Matt: You’re not going to hear any of us in the state talking about the Gold Coast. That reference goes back to the 1970s so that’s not verbiage you’re going to hear me, or even someone like Governor [Ned] Lamont using. It reeks of elitism, especially with the inequality of wealth levels in the state. The messaging is incredibly important here in promoting Connecticut. That said, you do have people in prosperous towns like Fairfield County who have made a lot of money; they’ve got funds to invest and time to allocate to opportunities. A lot of people in Fairfield County are incredibly gifted with expertise in their fields and are looking to put that to work. They want to stay active and be busy and invest in new opportunities. It’s an exciting time. 

Archie: Are there any particular startups or sectors hitting it out of the park? 

Matt: We’re strong in greentech, life sciences and fintech. In this calendar year, Greenworks Lending was acquired by Nuveen and Tantalus Systems went public. Our GreenTech portfolio is doing incredibly well. One of the top 10 Inc. 5000 companies of 2021 is Budderfly, a Shelton, Conn., energy efficiency company. (Note: Budderfly is also an Archie Group client). Governor Lamont, the Connecticut Department of Economic and Community Development (DECD) and its Commissioner, David Lehman, created a $50 million greentech fund at Connecticut Innovations. We’ll be able to use funds from the US Treasury’s State Small Business Credit Initiative (SSBCI) to roll out this program. We’ve also seen success working with diverse businesses, such as African-American or women-led businesses. There’s a separate fund we intend to launch this year called the Future Fund to support diverse, underrepresented founders. One of our portfolio companies, TruOptik, led by Andre Swanston, a black founder, recently sold for nine figures.

Archie: What are some interesting opportunities you’re looking forward to at Connecticut Innovations?

Matt: We just had cannabis legalized with the legislation passed here in Connecticut. The state wants us to be supportive of cannabis, so this is a whole new frontier that encompasses AgTech, consumer and diverse founders—it should be fun. This is the US, post-prohibition! And we’ve started to dip our toe in consumer investments. We’re also trying to jumpstart the venture capital activity here in the state. Up until recently, we only had two active funds in Connecticut, but by the end of this year, we’ll be up to more than 10 venture funds. We have a couple of new venture funds we’re investing in: Bullish, Tamarack Global, Acadian Ventures and HighCape Capital are rounding out our portfolio.

Archie: How are you marketing Connecticut as the “place to be” for entrepreneurs?

Matt: We just supported a comprehensive marketing campaign to highlight our strength in life sciences. In fact, Connecticut Innovations invested in Sema4,  a data sciences health intelligence company in Stamford that merged with a Special Purpose Acquisition Corporation (SPAC) and is now publicly listed. We also hold various events in the ecosystem, convening CEOs of companies in our portfolio, investors, corporate partners and other thought leaders. We’re building a strong angel investor community in the state, hoping to grow the list of accredited investors, who also play a pivotal role in growing our young companies. There will be real marketing opportunities with the introduction of the GreenTech Fund, Futures Fund and now with our entry into the consumer investing market. 

Archie: Where do you see Connecticut on the map in the next five years? 

Matt: Connecticut will come to be seen as a tech hub or life sciences hub in the same class as Boulder or St. Louis, or even San Diego. We’re about 10 years behind Austin, but even Austin started out small. So, why not Connecticut?

Connecticut Innovations is based in New Haven, Conn. and has satellite offices in Stamford and Hartford. To learn more visit ctinnovations.com