funding sources and incentive for investment in connecticut - cvg second thursday, 1/10/13

Panelists

Dana R. Bucin, Esq. Updike, Kelly & Spellacy

William B. Claffey, Esq. Fiondella Milone & LaSaracina

Funding Sources and Incentives for Investment in Connecticut

Claire R. Leonardi Connecticut Innovations

John Strahley Ironwood Capital

Moderator

Patrick O’Neill, P.E. Director, Investments

Connecticut Innovations

A Second Thursday Event presented by

Crossroads Venture Group

University of Connecticut Health Center (UCHC) Farmington

January 10, 2013

Funding Sources and Incentives for Investment in

Connecticut

Moderator

Patrick O’Neill, P.E. Director, Investments

Connecticut Innovations

Marketing at the Speed of Light

Welcome

Funding Sources and Incentives for Investment in Connecticut

Panelist

Dana R. Bucin, Esq. Updike, Kelly & Spellacy

Marketing at the Speed of Light Funding Sources and Incentives for Investment in Connecticut

Panelists

William B. Claffey, Esq. Fiondella Milone & LaSaracina

Marketing at the Speed of Light Funding Sources and Incentives for Investment in Connecticut

Funding Sources in Connecticut – State Tax Credits

William B. Claffey, Director of State Tax, Credits & Incentives

Fiondella, Milone, & LaSaracina, LLP

Funding Sources in Connecticut – State Tax Credits

FML, LLP Firm Overview:

– Regional accounting firm headquartered in Glastonbury with

satellite offices in Stamford, New Haven and Bristol

– Founded in 2002 when 3 founding partners broke away from a national firm; currently 8 partners

– Strong focus on providing audit and tax services to high-growth venture capital back companies.

– PCAOB registered with growing SEC practice

– Strong Accounting and Tax Consulting Services

Funding Sources in Connecticut – State Tax Credits

Dispelling a Myth

– Is Connecticut bad for business?

– State Comparisons

Connecticut Tax Advantages

– Apportionment

– Tax Credits / Incentives

Funding Sources in Connecticut – State Tax Credits

Tax Credits - Generally

– Investment Credits

– Operations Credits

– Hiring / Employment Credits

– Location Driven Credits

– Angel Investor Credit

Funding Sources in Connecticut – State Tax Credits

Tax Credits – What if I can’t use them?

– Refundable Credits

– Transferable Credits

– Value to the financial statements

Dealing with DRS/DECD

Questions?

Funding Sources in Connecticut – State Tax Credits

Helpful Resources

– Information Publication 2010(13)

– www.ct.gov/drs

– www.ct.gov/ecd

– www.fmlcpas.com

Panelists

Claire R. Leonardi Connecticut Innovations

Marketing at the Speed of Light Funding Sources and Incentives for Investment in Connecticut

January 10, 2013

Investing in Connecticut

CI grows businesses and jobs in Connecticut by providing innovative financing and strategic assistance.

Strong Track

Record Expertise

Access to Capital

Talent Advisers Strategic Partners

CI brings together best practices to grow innovative businesses

Support high-growth small businesses – financing, active engagement, connections

Help existing businesses innovate to grow and sustain market position

Foster an entrepreneurial environment

Leverage outside support

Promote collaboration

Historically self-sustaining

VC program -- 18%+ gross IRR; invested $210 million; leveraged over $1 billion in private capital

Loans -- $750 M loans; leveraged with $1.9 B from private-sector partners

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CI Financial Assistance

Equity and Risk Capital Investments

Debt Financing

Small Business Innovation (SBI) Funding & Services

Equity and Risk Capital

Startup Support

□ TechStart Fund

□ Pre-Seed Fund

□ Seed Investment Fund

Eli Whitney Fund – flagship fund

Venture & Mezzanine Debt Fund

Bioscience Facilities Fund

Connecticut Clean Tech Fund

Small Business Innovation

Supporting innovation, promoting collaboration and fostering an entrepreneurial environment in Connecticut through a variety of exciting initiatives:

Business counseling and strategic evaluation

Guidance on finding and obtaining resources and creating collaborative partnerships

Talent development and retention

18

Other Tech Initiatives

CTech - technology business incubators

Angel Investor Tax Credit Program

Innovation Ecosystem

Connecticut Stem Cell Research Program

The Jackson Laboratory facility at UConn Health Center

Debt Financing

Financing from $25,000 to $5 million

Initiatives:

□ Direct loans

□ Loan Guarantee Program

□ Participation loans

□ URBANK Capital Access Program

□ Information technology financing

□ Brownfields redevelopment financing

Financing support through collaborations with network of lending institutions statewide

DECD Financial Assistance

First Five Program

□ Large scale projects

□ Requires creation of 200 full-time jobs over 2 years or investment of more than $25 million plus 200 jobs over 5 years

Direct loans

□ Low interest and flexible

□ May include forgiveness for reaching predetermined job creation goals

Tax credit programs

□ Job Expansion Tax Credit

□ Urban and Industrial Site Reinvestment Credit

□ Film Production and Digital Media Tax Credit

□ Enterprise Zone Program

□ Sales and Use Tax Exemption

□ Municipal Property Tax Abatement

Small Business Express Program Goal and requirements

□ To provide capital to “Main Street” businesses with < 100 employees to help create jobs

□ Must be a CT company that has been in operation at least 1 yr

Types of assistance

□ Revolving loan fund ($10,000 to $100,000)

□ Matching grant program ($10,000 to $100,000)

□ Job creation loan fund ($10,000 to $300,000)

Uses: machinery and equipment, construction, leasehold

improvements, training, working capital and other business related expenses

Terms

□ Up to 4% interest and maximum 10-year term

□ DECD determines loan terms, conditions, and collateral requirements in a manner that prioritizes job creations

For more information:

www.ctinnovations.com

www.decd.org

Panelists

John Strahley Ironwood Capital

Marketing at the Speed of Light Funding Sources and Incentives for Investment in Connecticut

Private Capital for Growing Businesses

$93.0 million unit of Ironwood Capital, a 25-year old, $600+ million investment manager based in Avon, Connecticut

All investment capital provided by insurance companies doing business in Connecticut; formed as a Connecticut Insurance Reinvestment Fund

Focused on and experienced in making a broad range of debt and equity investments in early-stage through mature Connecticut companies

Business must be based in Connecticut

Must have fewer than 250 employees

Must have less than $10 million of net income

80% of the employees must be Connecticut residents

Strong growth potential

Ability to service debt

Identified exit strategy

We invest between $1 - $10 million of capital in later-stage growth and cash flowing companies to: ◦ Support organic growth

◦ Make acquisitions

◦ Augment existing capital providers

◦ Refinance existing debt

We can provide more flexible terms and conditions than many traditional sources of capital: ◦ Fixed and variable interest rates

◦ Flexible amortization tailored to meet business needs

◦ Streamlined process

◦ Pragmatic underwriting

$48 million invested in 24 Connecticut companies

Investment types: ◦ 80% Debt

◦ 20% Expansion Equity & PreSeed Investments

Broad Industry Representation: ◦ Manufacturing

◦ Information technology

◦ Business Services

◦ Environmental Services

◦ Green Tech and Clean Tech

Investment Experience – 12/31/2012

Victor Budnick, Managing Director

◦ (860) 409-2108

◦ Budnick@ironwoodcap.com

John Strahley, Managing Director

◦ (860) 409-2106

◦ Strahley@ironwoodcap.com

Alex Levental, Director

◦ (860) 409-2109

◦ Levental@ironwoodcap.com

Mike Benson, Senior Associate

◦ (860) 409-2115

◦ Benson@ironwoodcap.com

Ironwood Capital Connecticut

Upcoming CVG Events and Closing Remarks

Liddy Karter Executive Director, Crossroads Venture Group

Managing Partner, Enhanced Capital Partners

Marketing at the Speed of Light Funding Sources and Incentives for Investment in Connecticut

THANK YOU CVG SPONSORS

Deal Lead

B Round

THANK YOU CVG SPONSORS

A Round

Venture Capital Sponsors

Professional Service Firms

A Guide to the Digital Media Market University of Connecticut, Stamford 4:30 PM – 7:00 PM

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