The Power of Connection and Interdependence

Speaker 1
A
Speaker 2
huge part of venture isn't just sourcing the deals but it's winning them, right? So you get into the conversation with the founder and if they're a good founder, they're likely battling many offers. So a lot of times you win a company over by the value that you can provide. As a sort of a state, advise me on the language here, a state funded, state provided fund, how are you winning over companies?
Speaker 1
Yeah, I would say two different answers there. One, I think, is that we as an ecosystem leader and really a quarterback for climate tech in the state spend countless hours with founders once they're just starting to build their technology and their company, right, from when they're incorporating to when they're building their business plan to really be on the ground floor and help them. Not just because we want to be in on the deal when they get to that point, but because it's obviously a huge part of, you know, who we are as public servants, in addition to being venture capitalists. In terms of the actual substance of what CI can bring to the table, you know, by virtue of being a state entity, there's a lot of things that we can do that others can't. A couple examples, one is that we have a innovation lab that actually works with our government agencies and helps them innovate with our portfolio companies. And we put money behind that too to catalyze partnerships. So the way we think about it is we have this non-dilutive pot of money. And if we fund a pilot for an agency that is intrigued by a solution, but isn't willing to take that risk up front. But then that solution works with the pilot, the revenue opportunity is massive. It's highly synergistic for the state, and it's very accretive for CI as an equity investor in these companies. So the way to think about that is like a true pilot to procurement vehicle, right, by companies being in the state and by the state being a stakeholder in their company, right, that gives us the ability to really try and grease partnerships in a way. And it's really powerful and that everyone's incentives are incredibly aligned. I
Speaker 2
love that. And so now one thing that I feel like now we're going into almost like the fun strategy and how do you win, we got to take a step back. This is a question we ask investors all the time. But I feel like the responses always vary. I'd love to get your take. You know why did you decide you know what why did you decide to invest at the stage you invest in also prefacing you know please tell us these stage you do invest in as well as why do you believe your position as you know being a part of the Connecticut innovation ecosystem is best aligned for that stage of investing.
Speaker 1
Yeah so we typically like investing at the seed round. We're a $100 million fund and we like to make big bets in founders and teams in the state that we know and have high confidence in. That for us is where the capital can be really catalytic, especially in capital intensive, tech sectors. We're especially spending a lot of time in hard to abate sectors right now. Fuels, chemicals, carbon removal, right? There's not a ton of solutions at scale. And there's a lot of interesting innovations coming through our pipeline here in the state. So we find that our capital is most catalytic at that point, where you've got a core founding team, and then CI can just go to work, right? We can go to work introducing these companies to our government agencies. We can go to work introducing them to our utilities or universities. We can help them with our own hiring. We have our own talent acquisition team at CI that has pretty much every resume in Connecticut and also relocation and recruitment strategies to help companies bring people here. We have our own entrepreneur in residence program that will help take talented individuals across the state, put them in a high leverage situation. Those types of interventions are so powerful at the seed stage and it's where we just have, you know, cut our teeth and have a lot of experience so it's where we invest. We typically also reserve a lot of capital thereafter and this is somewhat different from some other funds, right? If you're a seed investor you want, you want to get most of your capital in early as possible, and then you have reserve a little bit later on. We typically will reserve up to 10 million per company for later stages so that we can always be there in every round because we think it's important that companies do well, that we're consistently there and participating and supporting them.

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