Senior Investment Associate
Connecticut Innovations sponsored and attended the recent New York Venture Summit, hosted by youngStartup Ventures. This was the 13th annual event and attracted nearly 600 attendees across three main technology tracks: life sciences, high technology and clean technology. I find these events to be invaluable. I did not go to New York expecting to meet my next portfolio company, though. While the quality of ventures presenting at the event is excellent and CI has, in fact, invested in entrepreneurial teams met at previous youngStartup venture summits, I mainly attend these events for another important reason: to connect the dots.
To connect the dots is to understand the relationship between different ideas, to recognize opportunities where value can be created by linking different individuals or entities, and to anticipate where markets are headed. Connecting the dots is a critical role of investors in and advisers to early-stage companies.
During the New York Venture Summit last week, I met many professional service providers – lawyers, accountants, management consultants etc. They can be a valuable source of deal flow for early-stage investors. Attorneys, for instance, have introduced many entrepreneurial ventures to CI. Before a company seeks funding, the company’s law firm usually helps an early-stage venture file its articles of incorporation or apply for its first patent. CI routinely brings in professional service providers to brief the investment team on the latest legal or accounting issues, share trends on where technologies and markets are headed, and provide insights on the environment for M&A transactions. Professional service providers can also support our portfolio companies directly and be hired by CI to provide due diligence expertise.
Venture capital firms, representatives from corporate venture capital departments, angel investors and other sources of capital participated in various panel discussions, acted as coaches during practice pitch sessions, judged the seven-minute pitches and roamed the halls exchanging business cards. Building an investor network is critical to CI’s success. We assemble investment syndicates for most of our deals, and having a wide variety of investors to contact greatly increases our ability to identify the right partners to bring in. These relationships have also resulted in introductions to companies that other VC firms have invested in. With respect to our investment interests, CI is more geographically focused than technology focused, which is generally the converse of most VC firms. Building close relationships with diverse investors allows us to share deal flow with experts in a particular space to get a quick first read on an opportunity and their perspective on the business model, competitive landscape and any key issues that should be the focus of further due diligence.
There were numerous entrepreneurs at the New York Venture Summit, representing Belgium, Israel, France, the Netherlands, the United Kingdom, Canada and the United States. I find it valuable to meet as many entrepreneurs as possible and learn what their companies are working on. Not only could one of these companies potentially be an attractive investment opportunity for CI, but any one of them could be a valuable partner (supplier, customer or otherwise) to a CI portfolio company. Learning what a company does (and why) and how a company sees the market growing and evolving is helpful competitive business intelligence. I personally find it intellectually fascinating to learn what problems companies are trying to solve and how they are trying to solve them.
Connecting the dots can be reaching into your network and connecting a contact with a key open management position, or introducing a portfolio company to a potential partner, or learning what a company is developing and anticipating how the market may or may not need that solution in the future. To connect the dots, one must establish relationships, gather information and learn about companies that haven’t yet hit the mainstream. Seeing the potential of a young startup, advising early-stage businesses as a board member, building business development relationships and positioning portfolio companies for successful exits is all about connecting the dots. The recent New York Venture Summit – with the contacts I made and things I learned – was invaluable in helping me connect the dots.