Second year for CTNext measures achievements, and raises questions

It’s been just over a year since Connecticut launched its grand experiment to create an ecosystem for entrepreneurs.

Dubbed CTNext, the system has launched four hubs, hosted many events, signed up hundreds of nascent companies and spent almost $5 million. But as it goes into its second year it has changed direction and some are left wondering if enough has been achieved. 

CTNext was in many ways the brainchild of the Connecticut Technology Council, and its president, Matthew Nemerson. He says Connecticut has plenty of innovation – but entrepreneurs felt isolated.

“Oftentimes we would start great companies here at Yale or UConn or Wesleyan, and then they would leave,” he said. “They would leave when they graduated, they would say, oh we’re moving to California, we’re moving to Boston. And everyone recognized that that had to stop, and it wasn’t going to stop through a program – it was going to stop through an environment.”

The Malloy administration and the legislature committed $25 million over five years to grow that environment. Nemerson says the driving force can be summed up in one word: Networks.

“If I walk into a professor’s office in Storrs,’ he said, “she will know that there is a financial person in Stamford and a research person in New Haven who should be part of this conversation –- because that’s exactly how it works in other places.”

Mark Lassoff is a longtime entrepreneur who was born in Connecticut, and now runs a highly successful nine-person software company, Learn to Program, in Vernon. But he got his start in the world of startups in Austin, Texas… a town with a formidable entrepreneurial vibe.

“It’s a feeling of belonging to a community of entrepreneurs, who are trying to knock over the proverbial windmills,” he explains. “And they’re doing it together. They’re not looking at it as competing with each other for scarce resources. They’re really looking at working together and collaborating to help grow the community and grow each other’s businesses together.”

Like many entrepreneurs in the state, Lassoff got involved with CT Next when it started up. He’s acted as a mentor, and his company has also received grant funding for an innovation project. But he says it’s been a very different experience than Austin. The main complaint?

“It’s been a very top-down experience, where the programs have been dictated by pseudo state agencies and partners who have been selected, versus a real coming together of the entrepreneurs who have said this is what we need and want in this community.”

In the first year, the 14 private entities who won funding to create CTNext were instructed to work together in hubs -– based in Storrs, Stamford, New Haven and Hartford.

DECD Commissioner Catherine Smith: “The prescriptive nature of it came from studying some of the other parts of the U.S. where this has been done quite successfully and trying to emulate those with some of the great things that have worked in other locations. I think what we learned is sometimes that works really well, and probably sometimes it doesn’t work as well.”

Managing director Tim Coates, who just left the ecosystem after the first year, came on board from an entrepreneurial effort in Canada. He discovered working across agencies and organizations doesn’t always come naturally in Connecticut.

Coates said “We spent a lot of time with those partners really trying to find a way to work together to understand what is the vision that we’re working towards, what is the process that we’re going to work with, within what structure do we decide certain things. And let’s go do that, and not get hung up on the fact that someone might have funding taken away, and there might be turf.”

Derek Koch runs Independent Software, a company based at The Grove, a co-working space for entrepreneurs that’s the home of New Haven’s hub of CT Next and what many say has been one of the most successful aspects of the ecosystem this year. Koch also runs the CT Next effort in New Haven and Middlesex counties. He says entrepreneurs’ experiences of working at the Grove are exactly what he would hope to replicate across the ecosystem. 

“As soon as you come into the community and you begin to work, you know, dozens of people begin to get a sense of who you are and what you aspire to,” he said. “So it’s not kind of one economic development person, or one consultant or one venture capitalist looking at you trying to understand what it is you’re doing and how I can help you, but it’s a whole community of people.”

 He agrees that there’s been friction this year, but he says the criticisms of the ecosystem by successful entrepreneurs are part of the point.

“Getting the whole community engaged in that process of giving their feedback I think is very, very important,” Koch said, “and also very frustrating because it kicks up a lot of dust — but that’s good.”

Good, and at the beginning of such a huge effort – perhaps inevitable.

“To me that’s kind of the big realization or ‘aha’ out of the first year,” he said. “We’ve spent most of our time learning and responding and pivoting and really also trying to listen to what entrepreneurs felt like they needed. And I think that was important to do in the first year. I don’t know that we could skip that step.”

That step and its results have led to big changes for the second year of CTNext.  Smith says the turning point came in June when DECD called entrepreneurs together for a brainstorming meeting.

“And they clearly said, you know, get rid of the bureaucracy, try to make it so we can do what we need to do,” she said. “That in fact is part of the reason that this new RFP is so open ended is trying to reflect that thinking, that those folks can come up with the best ideas.”

The new request for proposals – RFP – for the second year of CTNext, essentially says ‘there’s no model — bring us your ideas.’ The hubs had to reapply for funding, and other projects of all sizes are invited to apply. The Connecticut Technology Council will step down from its administrative role, and CT Next will be run from within a state agency – Connecticut Innovations. The CEO of Connecticut Innovations, Claire Leonardi, says she hopes the new approach will be more inclusive than the old one.

“I mean there’s a really wonderful nucleus that’s happening in Danbury, there’s a great new co-working space that’s started up in Bridgeport, and what we wanted to do was to really encourage the whole community,” Leonardi said.

But is this new way of doing business an admission that things didn’t work well the first year?

“What we really needed to raise was the visibility of what we were doing. So if it was really dispersed Year One, would we have raised that visibility? Maybe, maybe not. And it’s easy to look back and say we should have done something different.”

There’s been conflict in getting to this new approach. Leonardi had some substantive differences with DECD chief Smith about how the project should go forward, and Smith stepped down as chair of CI this summer, just a year after being installed in the role by the legislature. Both officials play down the impact of that move.

“At the end of the day, we are absolutely aligned on where we want it to go. I think the best ideas from smart people may not always agree, but when you agree on the goals you get to where you want to go.”

But in the end, what is the goal? CTNext engaged more than 500 companies this year, and more than 300 are being helped by the system’s growth advisors. But the creation of a real community is much more difficult to measure. And the whole question of metrics shows just why it’s difficult to involve taxpayer dollars in this kind of effort, which could last decades, and may involve painful honesty in examining wrong turns.

Nemerson: “That is a challenging thing to do in a public environment, especially with an election coming around. You never want to admit something didn’t work in government . As an advocate I love to look at things that aren’t working and say – why not? How do we do it better?”

Meanwhile entrepreneur Mark Lassoff says he hopes this new year will bring fresh hope.

“I want this to work,” Lassoff says. “I think everyone wants this to work, no matter what side of this they’re on, no matter how they feel about what’s happened in the past — everyone wants it to work. And the best way to get it to work is for us to keep talking to each other and keep trying things until it works.”

When the new RFP closed at the end of August, 85 different groups had applied for funding. DECD won’t say how much money it will commit to CTNext in this coming year, or how many groups will be chosen.