April 25th 2014
By Olivia Just
Connecticut’s business strengths have traditionally been in the financial services, insurance and defense production sectors. U.S. Sen. Chris Murphy, D-Conn., wants to add startup innovation to that list.
Murphy stopped by the Stamford Innovation Center on Friday to discuss his plans to introduce legislation for tax incentives that might encourage angel investors to fund startups. U.S. Rep. Jim Himes, D-Conn., joined the senator at a roundtable with entrepreneurs, investors, members of the Innovation Center team and those engaged in state funding programs for small businesses.
Although venture capital firms get most of the attention, angel investors do the heavy lifting of investment in new businesses, Murphy noted. The state currently offers a tax credit for angel investors pledging $25,000 or more in a qualified Connecticut business, worth 25 percent of the angel’s cash investment, according Connecticut Dept. of Economic Development. Murphy spoke of offering a similar tax credit on the federal level, while fixing a “small flaw” in Congress’ 2012 JOBS Act by giving angel investors more control over the financial data they disclose while investing. Currently, federal help for startups comes in the form of Small Business Innvoation Research grants, which the state has had a good deal of success in getting, Murphy said.
“Connecticut should start with an advantage,” he said. “The U.S. is in a similar position vis a vis the rest of the world that Connecticut is vis a vis the rest of the country. If we’re investing in research, development and education on a federal level, it will play to Connecticut’s strengths.”
One of the challenges is getting the risk-averse federal government to act in favor of startups, as both Murphy and Himes indicated.
“Washington is an engine for the preservation and advancement of legacy systems,” Himes said. “What about the business of tomorrow?”
Entrepreneurs in the room brought up the issues locating and recruiting talent within the state, whose business population generally skews older, and the difficulty of getting a foot in the door with larger companies in the area.
“Finding money is not the biggest issue,” said Daniel Sarfati, founder and CEO of the Stamford-based Applango. “The biggest issue we face is networking with enterprises, having large enterprises listen to us. Creating a welcome ecosystem for entrepreneurs would help.”
Oji Udezue, founder of Intermingl, came to Connecticut from the West Coast and was “pleasantly surprised” by the startup environment he found in Fairfield County.
“That reputation doesn’t carry to the rest of the county,” Udezue said.