Act Concerning Technology and Economic Growth – Testimony by Matthew Nemerson
Testimony of Matthew Nemerson, President of the Connecticut Technology Council Speaking on March 3, 2009 to the Commerce Committee Raised Bill No. 1067
Distinguished Chairmen and Members of the Committee, I represent a statewide community of over 2,000 technology oriented firms employing over 200,000 individuals whose jobs are related in some way to innovation and technology. We also work with another 500 smaller firms just starting and hoping to plant roots here in Connecticut.
This morning I wish to speak in favor of Raised Bill 1067, an Act Concerning Technology and Economic Growth. The next few years will be difficult ones for all of us and the economic slow down will put tremendous pressure on public leaders such as all of you to make very difficult budget decisions about what is the proper and required role of government.
It is my hope that you and your fellow legislators will support in some small but significant ways the critical responsibility to foster and accelerate the creation of new jobs for the state through high potential fast growing, start-up technology firms.
Bill 1067 would provide for $200,000 for activities that could be the continuation of a very successful program that has been funded through the Department of Community and Economic Development for the past three years through an allocation of Manufacturers Assistance Act funds as part of the larger “cluster programs” allocation.
Across the country states have been working with non-governmental organizations such as technology councils and innovation centers to create a process that can identify, analyze, assist and provide early stage angel investments for the very most promising high growth potential firms.
While it is important to offer some assistance to any entrepreneur who wishes to start a new business, in these times of severe economic hardship it may be even more important to focus some special state resources on those very few firms, perhaps no more than 3 or 4 in one hundred which stand a chance of adding not one or two new jobs to the economy, but hundreds or thousands. These firms and start-ups are out there, any many states now have concerted plans to snag them for own economies.
It has been shown over many years of monitoring the best practices of economic development that high potential tech start-ups need a realistic expert yet outside perspective to be able to move forward for initial funding. They also profit from a rich and dense network of allies who can make connections that will eventually lead to major strategic investments in lieu of having to go through a rare and unlikely initial public offering.
Slow economies are a time when ideas and talented people are often set loose outside of the limitations of large corporations and academic institutions. With more people trying to make their fortunes, the chances that great companies will be created are large. Last year the Council worked with over 250 would be start-ups – more than one a business day – and found $932,000 in matching cash and services to add to the $200,000 it received from the state specifically for the innovation pipeline program to provide services that no other group provides in Connecticut.
Groups like our and programs such as those described in 1067 use skilled mentors – we have about 70 of them working with our high tech start-ups. Most are unpaid, but most represent tremendous talent, that also needs to be engaged in Connecticut. Some are looking for new top jobs, others have been very successful and want to give back, others are in-between jobs. Most important the companies in this program predict that they could create over 10,000 new jobs and create businesses bringing in ¾ of a billion dollars. Having one place that knows about technology, the latest trends in the market place and has close connections to angel capital networks in the state is critical. We cannot expect the public sector to offer these kinds of services and across the country almost no governments do.
New York City just announced a similar grouping of offerings worth well over many millions of dollars.
Over 25 states have programs similar to what we are proposing.
Let me close by noting that Connecticut thrives on high value added jobs. We are a rich state, we have tremendous productivity, high education levels for our workforce and we want to maintain or increase the tax yield from people who are doing well and earning a lot.
And yet we have little or no population growth and we have created very few jobs through internal growth. Attracting and helping top entrepreneurial ideas, even if they bring new top management into the state with them, must be a very high priority.
In Connecticut Technology Council’s case we stop receiving funding from the state last September, and yet we have continued to fund this program out of our own fund balance. We have not dared suggest to the hundreds of firms we work with that there is any problem or to infer that we all do not think that helping these high potential start-ups is not a top priority.
Thank you for your time and attention on this matter. I urge you to support SB 1067 and to send it on to Appropriations with a joint favorable.