Investment InnovationsOctober 23, 2020
Like a player confident in his long term strategy, Connecticut Innovations doesn’t perspire a bad bet. Losing just as much as $5 million on a single company in one instance is a part of the venture capital investment game. It is a process that may seem like a slog, especially in the seven to 15 year investment cycles that early stage investors like CI concentrate on, but every so frequently a year comes along that justifies the strategy. A white hot mergers and acquisitions market in 2017, for instance, helped Connecticut Innovations reap its highest annual returns ever. Spurred by several major acquisitions of companies within its portfolio, CI cashed out $27 million from various investments in 2017, more than doubling the $11.5 million it’d originally staked in those firms.
It had also been CI’s most profitable year since the dot com boom of the late 1990 s, as measured by its ROI, officials said. The quasi public agency, that has about 160 companies in its portfolio, will reinvest the money in other Connecticut based technology, software and IT companies. Even more important, CI’s leaders hope last year’s performance turns some heads, attracting more external investment partners to Connecticut based deals. All of us want to be a part of winning and success, said CI Board Chairman Michael Cantor, co controlling your stressed partner of Hartford IP law firm Cantor Colburn.
Though CI’s mission is different than most other venture capital firms it’s got a double mandate to generate both economic development and returns and may only make in state investments it increasingly wants to be seen by VCs as an expert investor partner. They are calling me and saying I want to look at more of your deals, I want to look at more of your pipeline, said David Wurzer, CI’s chief investment officer. That is a big deal, to bring that capital into the state. CI Chief executive officer Matthew McCooe said market conditions helped last year’s performance, with more than 50, 000 global mergers and acquisitions announced in 2017, according to Thomson Reuters, the 3rd year in a row to hit that mark.
Wurzer admits 2017 was a bit of an anomalous CI and has averaged about $10 million in annual investment returns since 2005, but he is hoping for repeated performance in the coming years. The deals that made CI’s year – Like any venture fund, the most typical way CI invests in an investment is if a portfolio company is acquired or goes public. Several deals made the difference last year. They include: Avon technology firm iDevices, which was acquired by Shelton’s Hubbell Inc. For $59.2 million. CI had a $3 million stake in iDevices and roughly doubled that investment with the sale. Norwalk’s eTouches, that provides event management software and sourcing services, was purchased by Palo Alto, Calif., private equity firm HGGC for an undisclosed sum.