Connecticut Venture Capital Firms

venture capital firms connecticut

Connecticut is one of the most prosperous states in America. The state’s economy is largely driven by its financial sector, with some of the world’s wealthiest people living in Hartford. Connecticut also has a diverse manufacturing industry that employs over 250,000 people and includes companies like General Electric, Sikorsky Aircraft Corporation, United Technologies Corporation.

With so many thriving industries within the state borders it should come as little surprise that there are venture capital firms operating throughout Connecticut looking to invest their money into promising startups.

In this article, we’ll explore some of the top venture capital firms currently operating within Connecticut and tips for how entrepreneurs can connect with these investors.

 

List of Top Venture Capital Firms in Connecticut

The list below includes some of the top venture capital firms in Connecticut:

 

Greenwich

Kline Hill Partners

Oak HC/FT

Oak Investment Partners

 

Madison

Granite Growth Health Partners

 

Norwalk

Oak Investment Partners

 

New Haven

Elm Street Ventures

 

Rocky Hill

Connecticut Innovations, Inc.

 

Southport

HealthInvest Equity Partners

 

Stamford

Synchrony Ventures

 

What is Venture Capital?

Venture capital is financing that comes from firms or individual venture capitalists who provide money to startup companies and small businesses that are believed to have high growth potential. In exchange for venture capital, startups will often give up some percentage of their company to venture capitalists. This is called ‘equity’.

 

What Types of Business Use Venture Capital?

The types of businesses that often use venture capital are high-growth and emerging companies. These businesses are usually in the early stages of development, and a venture capitalist will invest in them in hopes that they will grow rapidly and become profitable.

These companies are commonly in the following industries:

  • Technology
  • Health Care
  • Digital Health
  • Medical Devices
  • Financial Technology (Fintech)
  • Biotechnology (Biotech)
  • Financial Services
  • Life Sciences
  • Clean Energy
  • Engineering & Manufacturing
  • Media & Telecommunications
  • Technology-Enabled Services
  • Consumer Products
  • Artificial Intelligence

Not all venture capital firms specialize in every industry, so it is essential for entrepreneurs to do their research before approaching these active investors.

 

Tips for Attracting Venture Capital in Connecticut

1. Have a Compelling Business Plan

One of the most important things that a venture capitalist will look at when considering investing in your company is your business plan. This document should outline everything about your business, including your mission, products and services, target market, competitive landscape, marketing strategy, financial projections and more.

Make sure to have a well-written and compelling business plan that shows that you have a clear understanding of what you’re doing and how you plan to succeed.

2. Have an Impressive Management Team

In addition to having a great business plan, another factor that venture capitalists consider when deciding whether or not to invest in a company is the team behind it. This includes the founders as well as any other key employees.

Your team should have excellent experience, knowledge and skills in the industry they’re operating in. If you don’t, make sure to include a section of your business plan that demonstrates your ability to hire top talent and work well with others.

3. Demonstrate Market Potential & Growth Potential

Venture capitalists look for businesses that can grow rapidly and have high market potential.

A venture capitalist would rather invest in a company that’s projected to be worth $100 million in 10 years, instead of one that’s valued at just $1 million. To determine your target valuation, you can use the discounted cash flow method .

4. Demonstrate Market Traction & Product-Market Fit

If you have found an untapped need or problem in your industry and are able to sell the solution, it will help convince venture capitalists that you have product-market fit.

This is especially true if others have already given you money to develop your concept into a workable business model. Make sure to highlight any revenue streams your business is already bringing in, as well as any positive client feedback.

5. Have Market Differentiation & Competitive Advantage

It’s important for venture capitalists to invest their money into companies that are different from the rest of their competition. You must demonstrate how your product or service is better than what your competitors are offering.

Also be sure to highlight your competitive advantage – why is your company better than the others? What sets you apart from the others and makes you a strong contender?

6. Demonstrate Your Understanding of Financial Metrics

Venture capitalists will closely examine the financial data associated with your business, such as revenue, gross margins and cash flow. Make sure to provide specific details about your financial performance to give venture capitalists an idea of what your business is worth.

A great way to do this is by showing that you have a proven track record in the industry , especially if you’ve brought in more than $2 million in revenue per year.

 

Understanding the Stages of Venture Capital Funding

Many entrepreneurs don’t understand the different stages of venture capital funding and what’s required at each stage. Let’s take a closer look at each stage so you have a better idea of what to expect.

Seed and Early Funding: This is the earliest stage of venture capital funding, when a company is typically in its early stages of development and hasn’t yet generated any revenue.

In order to get seed or early-stage funding, you’ll need to have a great business plan, an impressive management team, and evidence of market potential.

The typical amount of money that’s invested during this stage is between $250,000 and $2 million.

Startup Stage: Once a company begins generating revenue, it can then move into the startup stage.

During this time, venture capitalists want to see that you have the ability to grow your business by at least 20 percent per year for three years in a row. Additionally, they’ll also look for market traction and product-market fit.

Venture capital investments during this stage are typically between $2 million and $10 million.

Growth Stage: If you’re able to grow your company at an impressive rate, it will show venture capitalists that you have strong potential for success. At this stage, venture capitalists typically expect revenue growth of over 50 percent each year , as well as top line growth of over 75 percent every year.

Business expansion is also a key factor during this stage, as venture capitalists look for companies that can enter additional markets and boost their presence throughout the country.

In order to get funding from venture capitalists in this stage, you’ll need to show that your company has been profitable for at least one year. You’ll also need a management team with extensive experience and a strong track record of success.

 

Other Investors in Connecticut

Outside of venture capital investment, there are a number of other investors available for emerging growth companies in Connecticut. These include angel investors, accelerators, and private equity firms.

An angel investor is an affluent individual who invests in early-stage companies with high growth potential. While most angel investments are made during the startup stage, they can also provide early-stage or bridge funding before venture capital firms are willing to invest.

Several accelerators operate in Connecticut as well providing entrepreneurs with seed funding, mentorship programs and access to valuable business contacts. Before you apply to one, however, make sure that your business is in the startup and seed-funding stage in order to get the most out of these programs.

Private equity firms invest in both early and growth-stage companies. They typically provide funding in the form of a loan in exchange for partial ownership of your company. This is another form of funding that’s available to early-stage companies with high potential.

 

Related Articles

How to Write a Business Plan for Raising Venture Capital

Venture Capital Financing Within Your Reach

The Ultimate Guide to Getting VC Funding

 

Local Resources

Connecticut Entrepreneur Resources

The State of Connecticut’s Business Resources: https://business.ct.gov/ 

Connecticut Business & Industry Association (CBIA): https://www.cbia.com/

Connecticut Small Business Development Center (SBDC): https://ctsbdc.uconn.edu/ 

Small Business Administration (SBA) | Connecticut: https://www.sba.gov/local-resources/connecticut

 

How Growthink Can Help

Growthink is a national business consulting firm headquartered in Los Angeles. Since 1999, our business consultants experts have written more than 4,000 strategic business plans for entrepreneurs, small businesses, mid-sized firms, and Fortune 500 corporations seeking funds from venture capitalists, angel investors, or other investors. We can help your business, too!

Learn more about Growthink’s business plan consulting services and methodology.