Impact of Connecticut Innovations

25 01 2010

ConnTIP has previously written about the importance of Connecticut Innovations, Inc. for start-up and tech companies in Connecticut.  , Well, now there is a study that backs those claims up, The Economic Impact of Connecticut Innovations’ Portfolio on the Connecticut Economy.  CI is a quasi-public corporation that has invested in CT-based tech and start-up companies since as early as 1995.  According to CI’s blog entry, the study, commissioned by CI and covering 1995-2008, found that:

  • CI’s investments grew Connecticut employment by an average of 1,610 jobs each year.
  •  The cumulative, net state revenue generated exclusively by CI’s investment activity exceeds $209 million (an average increase of $14.9 million in net state revenue every year).
  •  Connecticut’s cumulative investment in CI of $106 million leveraged an additional $1 billion from CI’s investment partners over the period studied.

- Gregg J. Lallier


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Challenges for Immigration Entrepreneurs

20 01 2010

I was recently quoted in a Connecticut Post article regarding immigration options for winners of a business plan competition.  The article illustrates the immigration challenges faced by foreign students at the University of Bridgeport who, despite their proven potential as entrepreneurs and ability to attract financing, nevertheless face difficulties in obtaining a visa or a green card in the U.S. 

Such difficulties are typical within our immigration system despite the contributions that immigrant entrepreneurs have made and continue to make to the U.S. economy.  According to a National Venture Capital Association study on The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness:

  • 40% of venture-backed public companies in the high-tech sector were founded by one or more immigrants
  • More than half of the employment generated by U.S. public venture-backed high-tech manufacturers has come from immigrant-founded companies
  • The largest U.S. venture-backed public companies started by immigrants include Intel, Solectron, Sanmina-SCI, Sun Microsystems, eBay, Yahoo! and Google
  • Nearly 47% of the founders of privately held venture-backed companies were immigrants
  • Data shows immigrants in general possess great entrepreneurial capacity, especially in technical fields

 Yet the U.S. immigration laws are just as restrictive, if not more so, towards these foreign entrepreneurs.  To begin with, with very few and strict exceptions, there is no special visa or green card available to an entrepreneur who wants to start up a business in the U.S., even though the entrepreneur can attract venture capital or private equity financing.  Our current immigration system focuses more on visas for employees who can work for U.S. employers than on visas for foreign entrepreneurs who want to start up a business in the U.S.  Thus, recommending immigration options for foreign entrepreneurs takes some creative thinking.   

 Following are some of the immigration options available to early-stage entrepreneurs:

  • If they came on an F-1 student visa to obtain a Bachelors, Masters, or PhD degree in the U.S., they can use the Optional Practical Training (OPT) work permit to legally work in the U.S. after graduation for one year, or for 2.5 years for a science, technology, engineering or math (STEM) student.  During the OPT period, the entrepreneur can work on developing his or her business to the level where the business can justify hiring the entrepreneur on an H-1B visa
  • They can establish a successful company in their country of origin, work for the company for one year, and then establish a new office for the company in the U.S., where they can transfer themselves as a manager or executive on an L-1A visa or as a worker of specialized knowledge on an L-1B visa
  • They can first become employees with an established U.S. employer, in order to obtain an H-1B visa and then a green card based on that employment relationship, after which they can start their own business
  • They can obtain a green card based on a qualifying family relationship with a U.S. citizen

 Each of the options above is subject to strict eligibility requirements and complex documentation.  Thus, advance consultation with an immigration attorney is highly recommended.

For a brief presentation on Immigration Law with a focus on business- and employment-based visas, see my webcast.

- Dana Bucin

Dana is an immigration attorney at Updike, Kelly & Spellacy, P.C., and contributing author to ConnTIP


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Universal Broadband (Continued)

23 12 2009

As a follow-up to the ConnTIP post from last month (Universal Broadband on the Horizon?) about the upcoming FCC plan to bring universal broadband to the U.S., the WSJ is reporting that FCC officials are looking at to set the floor for Internet speed in the 2-4 mbps range (See FCC Eyes Average Internet Speeds for Rural Areas).  Pretty modest goals, which won’t do much for rural areas.  But, considering that the FCC estimates that the cost of providing universal broadband is $20 billiion for 3 mbps, $50+ billion for 50 mbps, and $350+ billion for 100+ mbps, it’s not hard to figure out why they’re looking at slower bandwidths.

-Gregg J. Lallier

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Universal Broadband on the Horizon?

19 11 2009

Most of the political talk lately has centered on the Obama administration’s attempt to provide universal healthcare.  However, if the new proposals being floated by the FCC are any indication, it seems that a focus of the Obama administration will also be universal broadband.  The Wall Street Journal has an article explaining this at Feds Mull Rules, Fees to Spur Net Access.  According to the article, the FCC is considering whether the government should take greater control over expanding the accessibility to broadband coverage, and is looking at three different options to pay for the $20-350 billion (that’s right…billion) of costs that the FCC estimates it will take to accomplish this goal:

1.  Increase the $7 billion federal phone-subsidy fund (the Universal Service Fund) which comes from charges added to consumer phone bills….which, of course, is a fancy way of saying a “tax”.

2.  Revival of open access rules requiring Internet providers to lease their networks to others at rates regulated by the government…which, of course, is being opposed by large phone and cable companies.

3.  Reclamation of airwaves from TV station owners in order to auction them off to wireless companies who could provide high-speed wireless broadband….which, of course, broadcasters and station owners aren’t too happy about.

According to the WSJ article, although no options have been recommended to, or approved by, the FCC Board, FCC officials plan on presenting possible solutions in December 2009 with formal recommendations in February 2010 in conjunction with its release of the National Broadband Plan.  Earlier this year, Congress had asked for such a plan from the FCC about improving broadband speed and access.

The News Hub Digital Desk discusses these FCC plans in this video:

This probably is good news for e-commerce, media and other types of internet-centric businesses, as such will expand the marketplace of consumers with access to their products/services. 

In any event, as the WSJ article points out, these ideas of the FCC under the Obama adminstration are a reversal from the FCC policies under the Bush administration, when government control of Internet and telephone service was curtailed.

Something to keep an eye on.

-Gregg J. Lallier


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Obama Administration’s Developing Intellectual Property Policy

17 11 2009

As everyone knows, with each new presidential administration, comes new policies with new focuses over a variety of issues.  As everyone also probably knows, the Obama administration’s policies on Iraq, Afghanistan and healthcare have dominated the public’s attention for most of the past year.  However, there are other policies to be revealed and developed, including intellectual property policies.  Over recent weeks, the administration has given inventors, developers and holders of intellectual property (and, in particular, patent holders) some reason for optimism about the Obama administration’s IP policy.

Most recently, Gene Quinn of IP Watchdog posted in No Climate Deal in Copenhagen Good for Green Patent Rights that:

It had been feared that in order to obtain an international agreement the Obama Administration would broker the patent rights held by US concerns and give them to third world and developing nations in exchange for them taking steps to curb carbon dioxide emissions

The IPWatchdog post goes on to say that, as reported in the Wall Street Journal, it seems unlikely that the United Nations Climate Change Conference in Copenhagen (December 7-18, 2009) will result in a binding international treaty which “can allow patent and intellectual property advocates breathe a sigh of relief, at least for now”.

This comes on the heels of the November 6, 2009, recorded video of Commerce Secretary Gary Locke announcement to the Independent Inventors Conference at the United States Patent and Trademark Office, as reported in the same IPWatchdog post, that “the Obama Administration pledges to continue to provide full support to all inventors and to continue to support the strongest intellectual property protections in the world.”  (See also IPWatchdog Secretary Locke Promises Strongest IP Protection in the World)

These are encouraging signs of the Obama administration’s commitment to IP, which is good news for the business community, and entrepreneurs and start-ups in particular.

-Gregg J. Lallier


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Hollywood East Tax Credits A Hot Topic at CT Digital Media Business Conference

12 11 2009

Connecticut’s “Hollywood East” tax credits program played a prominent role in the 2009 CT Digital Media Business Conference, which was held on November 11 at UConn’s Stamford Campus.  Here are a few interesting notes on the State’s film and digital media industry and the controversial tax credit:

  • Various speakers stressed that the State must be consistent in its message and approach to attract film and digital media businesses to Connecticut.  The debates in the General Assembly over whether the tax credits are working as intended and changes to the credits appear to have left some uncertain as to whether State is committed to the incentives that were first enacted in 2006.
  • On the other hand, the current economic climate in Connecticut and throughout the country was discussed as a factor that caused the tax credits to be scrutinized more closely.
  • Building infrastructure to support the film and digital media industry is still a priority, and a necessity.
  • The video game industry was mentioned more than once as a segment that could be important to the State’s economy.  To this end, see Gregg Lallier’s post Connecticut Video Game Industry – Promise and Pitfalls.
  • Governor Jodi Rell’s announcement that she would not run for reelection did not go unnoticed.  First, Stamford Governor Dannel Malloy, who has designs on running for Governor, delivered the keynote address.  Second, the issue of jobs in the upcoming election could provide an interesting tie-in with the tax incentives for the production of film and digital media.

-Dan Fitzgerald


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Innovation and Obama

3 10 2009

For those who are looking for President Obama to provide some leadership in the innovative spirit of the U.S., check out his recent speech that he made on September 21 at Hudson Valley Community College in Troy, NY.  Some encouraging quotes:

So as we emerge from this current economic crisis, our great challenge will be to ensure that we don’t just drift into the future, accepting less for our children, accepting less for America.  We have to choose instead what past generations have done:  to shape a brighter future through hard work and innovation.  That’s how we’ll not only recover, but that’s how we’ll also build stronger than before:  strong enough to compete in the global economy; strong enough to avoid the cycles of boom and bust that have wreaked so much havoc; strong enough to create and support the jobs of the future in the industries of the future.

My budget finally makes the research and experimentation tax credit permanent.  This is a tax credit that helps companies afford the often high costs of developing new ideas, new technologies, new products — which means new jobs.  And this tax incentive returns two dollars to the economy for every one dollar we spend.  Time and again, I’ve heard from leaders — from Silicon Valley to the Tech Valley — about how important it is.  I’ve also proposed reducing to zero the capital gains tax for investments in small or startup businesses, because small businesses are innovative businesses; they produce 13 times more patents per employee than large companies do. 

Now, these tax incentives will spur entrepreneurship.  But there are other important steps to foster markets that value and promote risk-takers and idea-makers who’ve always been the center of our success.  That’s why it’s essential that we enforce trade laws and work with our trading partners to open up markets abroad; that we reform and strengthen our intellectual property system; that we sustain our advantage as a place that draws and welcomes the brightest minds from all over the world; and that we unlock sources of credit and capital which have been in short supply as a result of the financial crisis.

It remains to be seen if the President can make good on his call to action, but, as has been the theme of President Obama’s administration, there seems to be a good reason to “hope”.

A nice analysisof the speech by a McCain supporter can be found at IPWatchdog.

-Gregg J. Lallier

 


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Seed and Startup in CT Strategic Plan

29 09 2009

Connecticut’s economic strategic plan was recently unveiled by Governor Rell, and we should all be pleased to see that seed and early stage funding is given some considerable attention.

Increase Angel and Seed Capital – The state should make available funding for a preseed/seed capital fund, that is managed and matched by private sector funds, and should consider restoring Connecticut Innovations funding.  In addition, funding should be made vailable to develop angel capital networks, specifically through an angel investor tax credit program.

Create a new CTech Fund for the 21st Century. This new fund would be a $60-$100 million public/private venture capital fund to accelerate the growth of the technology sector here and position the state as a high-technology center. The fund would be seeded with $20 million in public dollars with the goal of leveraging an additional $40-$80 million in private funds.  The new fund would be a subsidiary of CI [Connecticut Innovations], but with board members composed of those members who contribute to the fund.  Potential funding partners include companies who are headquartered here (e.g., GE, UTC, Pitney Bowes, Boehringer Ingelheim); public utilities; Connecticut-chartered banks; insurance companies; tribal nations and private colleges and universities. Ohio, Kentucky and Pennsylvania have similar programs.

This is certainly a step in the right direction.  Further, it’s nice to see the state recognize the importance of CT Innovations in the process (read more about CI and the strategic plan here.)

-Gregg J. Lallier

 

includes a number of recommendations that would expand Connecticut Innovations’ role, initiatives and resources, allowing us to further support the growth of the state’s technology community. This is good news for CI and the emerging companies we serve.


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H-1B Visa Cap Not Yet Reached

25 06 2009

United States Citizenship and Immigration Services (“USCIS”) announced on May 26, 2009 that the cap for FY 2010 has not yet been reached. 

The “cap” is a numerical limitation imposed each year by Congress on the number of foreign workers who can obtain an H-1B visa.  There is a cap of 65,000 H-1B visas available to foreign workers in a “specialty occupation” which requires at least a B.A./ B.S. degree and a cap of $20,000 H-1B visas available to foreign workers in a “specialty occupation” with an advanced degree from a U.S. institution of higher education.  Typical examples of an H-1B-eligible “specialty occupation” include: architects, engineers, computer programmers, accountants, doctors and college professors.

For the fiscal year 2010, USCIS has so far received only 45,700 application against the 65,000 H-1B cap and 20,000 against the 20,000 advanced degree cap.  USCIS announced that it will continue to accept H-1B petitions against both caps (the applications received for advanced degrees will now be counted against the 65,000 regular cap). 

For companies in the technology fields, this means that there is still time to apply for an H-1B visa for their foreign workers who qualify as “specialty workers” (a minimum of a B.A./ B.S. degree and theoretical or technical expertise in a specialized field) and who will start employment in an H-1B status anywhere from October 1, 2009 and March 31, 2010. 

- Dana Bucin of Updike, Kelly &  Spellacy


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CT Innovations Funding (continued)

5 05 2009

The Hartford Business Journal has picked up on the story regarding the Connecticut legislature’s proposal to transfer $9.5 million from the Connecticut Innovations fund to help offset the 2009 budget deficit (see story HBJ story here).  As I posted yesterday (see “Connecticut’s Shortsighted Proposal to Transfer $9.5MM from CT Innovations”), this shortsighted quick fix to Connecticut’s budget problems will have a serious negative impact on the start-up tech sector in Connecticut. 

It’s important to note what Peter Longo, President and Executive Director of Connecticut Innovations, means when he writes that such transfer of funds will result in CI being unable to fund any of the 22 companies currently in its pipeline.  It means that 22 promising Connecticut or Connecticut-bound companies (because CI only invests in Connecticut-based companies) will lose a potential investor, in an already scarce venture capital market.  As a result, the state runs the risk of such companies going out of business because of undercapitalization or moving out of Connecticut to places with lower overhead and greater venture opportunities.  Furthermore, such non-funding by CI may result in lost revenue opportunities for the state if any of these companies become a valuable target when the merger/acquisition/IPO market re-invigorates.

-Gregg J. Lallier


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