It could be years before results are visible, but Connecticut made the first significant move Thursday to extend state government’s role in promoting startup firms and early-stage business ventures.
The Senate approved a $19.7 billion state budget that includes a provision broadening the work of CTNext, a subsidiary of Connecticticut Innovations, the state’s venture capital fund, to increase state involvement in building an entrepreneurial community drawing investment and creating jobs.
Senate debate followed weeks of negotiations between legislators hobbled by falling revenue and business and economic development advocates urging state action. The budget heads to the House of Representatives on Friday.
“We believe this is a good first step,” said Bonnie Stewart, a lobbyist for the Connecticut Business and Industry Association. “Will it do what everybody envisions it’ll do? I have no idea.”
“We’re in the early-stage business,” she said. “Our expectation of our companies is there is a long tail. They’re just getting off the ground.”
Gov. Dannel P. Malloy and the legislature have made a priority of spurring bioscience research, medical device manufacturing and other high-tech enterprises. The businesses are well-suited for efforts encouraging private investment, advocates say.
Lawmakers and officials at Connecticut Innovations and the state Department of Economic Development negotiated during much of the just-ended regular legislative session to hammer out the measure. Cost was a concern as state government cuts spending to match declining revenue. State agency oversight also was an issue as officials negotiated the duties of Connecticut Innovations and the Department of Economic and Community Development.
Stewart said businesses also objected to money being taken from a fund earmarked to promote manufacturing. The proposal was scaled back, she said.
The negotiations stalled efforts by legislative leaders to bring the bill up for a vote before the end of the annual session May 4.
Sen. Martin Looney, president pro-tem of the Senate, said the state wants to spur links between applications of technology to business and academic research and make Connecticut Innovations more effective as a “stimulator of economic activity” by lending to fledgling businesses.
With most business growth in the state occurring in newer firms, policy should encourage early-stage and startup enterprises, he said.
The legislation requires CTNext to develop and update an annual strategic statewide marketing plan to promote Connecticut as an “innovation and entrepreneurship hub.”
Bonds of up to $1.4 billion may be sold to finance job creation at small businesses of 100 or fewer employees, job training, construction and renovation of manufacturing plants, improvements at the submarine base in Groton and other functions.
The legislation also calls for $29.5 million over five years to finance “innovation places,” defined as geographic areas that can foster startup businesses near established companies or institutions, are accessible to public transportation and encourage private investment.
Millions of dollars more would be earmarked for university and other programs.
CTNext is charged with bringing entrepreneurs together, providing technical training and coordinating new strategies for technology-based talent and innovation, including creating and running the Connecticut Small Business Innovation Research Office to act as a clearinghouse and provide technical assistance.
Stewart and Looney said they expect changes will be made to CTNext and its work in the coming years.
“You never know when the next startup is,” Stewart said. “We want to have more here.”