Changes on the Way in New Haven Media Coverage

The news media focused on New Haven is undergoing some changes, as one publication ends, a new electronic weekly business news round-up is about to begin, and a longtime local business paper is changing its subscription system, reducing the number of non-paying subscribers. New Haven Living magazine, published by the Hartford Courant Media Group in recent years, will cease publication with its January edition, the company recently announced.  The New Haven-focused edition of the weekly CTNOW. an entertainment section, will also cease publication, last publishing on Dec. 29, the company said.

The Courant plans to continue publishing Hartford Magazine and the Hartford edition of CTNOW.  Each monthly addition of New Haven Living was nearly identical to Hartford Magazine, usually with a handful of New Haven-focused articles and features added.  The Courant reported that it made the decision while evaluating opportunities to invest in higher-growth areas and the cost of distribution in Greater New Haven.

Business New Haven, which began publication in 1993, announced in its latest issue that “we are changing our publishing approach” in an open letter to readers from veteran publisher Mitchell Young, under the headline “The Time Has Come To Decide.  Do You Want Business New Haven?”

Young says that “only paid subscribers will be guaranteed” to be included on the newspaper’s circulation list beginning with the next issue.  Subscriptions to the monthly print edition will be $24 per year.

“We believe in the value of quality local publications and we hope you find us worth the cost of a lunch – perhaps that is a way of saying there is No Free Lunch,” the full-page letter said.

A limited number of promotional copies will be limited “based on a proprietary algorithm for the support of our advertisers,” Young noted.  He also indicated that plans are in the works to expand the publication’s CONNTACT.com website in the next year, as “we try to build our subscriber base” for the print edition.  Business New Haven also publishes the monthly New Haven Magazine.

The Hartford Business Journal (HBJ), which prints a weekly print edition in the Hartford region and has a roster of electronic news publications and business-oriented events, added a statewide daily email aimed at business executives statewide in 2013.  The  paper recently announced that for those doing business in New Haven and Middlesex Counties, a weekly news round-up, New Haven Biz, will be added to the HBJ e-mail line-up on February 1.

The email is slated to deliver a weekly roundup of business news and information from the Elm City and beyond, the paper’s website explains. The Hartford Business Journal recently had a prominent location at the Greater New Haven Chamber of Commerce Big Connect annual business-to-business event to promote the upcoming news service.

The publication also emails HBJ Today each weekday at noontime highlighting the day’s lead business stories.  Subscriptions to the email-delivered news products, which also include the CT Health Care Weekly and CT Green Guide Weekly, are free.   CT Morning Blend includes the top business stories from online news sources around the state and the nation “to keep business decision-makers ahead of the competition.” It also includes a stock market snapshot and a business calendar.

HBJ, with a strong local presence in Greater Hartford for more than two decades, is published by New England Business Media, which also publishes the Worcester Business Journal and MaineBiz.  It also sponsors the annual CT Business Expo at the Connecticut Convention Center and numerous business programs and events in the region.

Pasta Making Business Continues to Grow, Government Continues to Help

Sometimes, home-grown businesses decide to stay in Connecticut.  That was the case this fall as Carla’s Pasta – an American Dream business success story – reportedly spurned an offer to relocate to a western state, and chose instead to expand in South Windsor, aided by a significant tax abatement. The company produces filled pastas, Italian sauces and pestos, appetizers, and entrees. The brainchild of Carla Squatrito, the business now employs 156 people, including her sons, Sandro Squatrito and Sergio Squatrito, who are vice presidents of business development and operations, respectively. The Italian food product manufacturer, which was launched in 1978, in Manchester and moved to South Windsor in 1997. 

The latest expansion deal, as reported by the Journal Inquirer, will see the town give the family-run Carla’s Pasta a 70 percent tax abatement for seven years, reducing the company’s tax burden by well over $200,000 per year.  The planned expansion is expected to generate 60 to 100 new jobs, and is due to be completed next fall. In 2013, Carla's completed a 30,000-square-foot expansion of its South Windsor facility, the Hartford Business Journal reported.

Town Manager Matthew Galligan, the JI reported, said the state of Utah was courting the company, but Carla’s ultimately decided to stay in town as a result of the deal that was approved by the Town Council.

Carla, a native of the small Italian village of Madonna del’Olmetto, emigrated to the U.S. at age 27.  Her business began as a means of bringing “home-made filled pastas, Italian Sauces and Pestos, made from fresh ingredients, the flavors of her youth” to local customers, retail and later wholesale.  Since 2010, Carla has been recognized by the National Women Business Owners Corporation as an outstanding CEO.

The company distributes its pasta to restaurants, institutions and supermarkets. In 2012, the company estimated that it was making about 2 million pounds of pasta per month, with projections to increase that number by a third.

The company received a bridge loan of $2,175,000 from Connecticut Innovations that year to help purchase and install a fuel cell along with a $750,000 grant from the Connecticut Clean Energy Fund. The state assistance was aimed at supporting the company efforts to be environmentally conscious and energy efficient.

In Oct. 2015, the company launched its own retail brand, Cucina di Carla.  Among the distinctive products inspired by the season:  autumn-inspired cinnamon clove pasta ravioli filled with golden pumpkin, whole milk ricotta and Fall spices.

https://vimeo.com/150720277

Award-Winning Start-Up Accelerator to Launch Largest Class of Social Enterprises, Fledgling Businesses

When the Hartford-based Social Enterprise Trust, known as reSET, was among the winners of the U.S Small Business Administration’s Growth Accelerator Competition last year – the only Connecticut organization to do so and one of 80 nationwide – it was not known what earning that designation, and  the $50,000 that came with it, would mean for reSET’s Impact Accelerator program. Now, the picture is becoming clearer – and boosting Hartford’s reputation as a city for socially committed entrepreneurial start-up businesses.  The expanding initiative is attracting not only home grown companies, but start-ups from elsewhere across the country, including as far away as California.

Tailored for impact-driven businesses but available to all early-stage ventures, reSET’s Impact Accelerator, now beginning its fourth year, has as its primary objective to test and hone entrepreneurs’ models, and to connect them to networks, mentors, customers, and resources.

A cohort of 22 businesses have been accepted to the program and most of their models are impact focused, serving the educational technology, health and health tech, energy, and agriculture industries. More than 60 percent of them are already generating revenue.  It is the largest group of companies to take part in the accelerator program at reSET, and the first to include a handful of out-of-state participants.

Running from January 20 to June 2, reSET’s accelerator will feature a more flexible program designed for busy, full-time entrepreneurs, as well as a ‘pay what you can’ model.  Entrepreneurial teams will attend five weekend summits, with 30+ optional workshops, mentor office hours, and consultations with an Entrepreneur in Residence conducted during the week.

At program’s end, a $25,000 accelerator funding pool will be available to the cohort, and they'll have priority access to reSET’s investment fund as well, via mentors and advisors that can help them put their best foot forward with their applications, according to reSET officials.

The 2016 cohort includes: Agyncy (www.agyncy.com), AmRide (www.amride.com), Asarasi (www.asarasi.com), BLT Robotics (www.bltrobotics.com), Doors to Explore (www.doorstoexplore.com), DopaFit (www.mydopafit.com), Enviro Power, LLC (www.enviropowertec.com), Keep Sight (www.keepsight.com), Lion’s Heart (www.lionsheartservice.org), Mivy (www.mivyapp.com), Movia Robotics (www.moviarobotics.com), Muni (www.muni.info), myHomeProNetwork (https://myhomepronetwork.com), Plucked (www.pluckedadmissions.org), RepVisits (www.repvisits.com), ScripFlip (www.scriptflip.org), SnapSeat (www.snapseatbooths.com), Tainted Inc. (www.tainted-beauty.com), Text Engine (www.textengine.info), The TubieGuard (the-tubieguard.myshopify.com), Trekeffect (https://trekeffect.com), and Untapped Potential (www.upotential.org).

“We’ve made a strategic shift with our accelerator model so it can accommodate more participants at one time, which we feel will really encourage more collaboration,” said Rosie Gallant, reSET’s Director of Programs. “The shift will help tee up the accelerator for our annual Impact Challenge as well, since the program will wrap in the spring right around when applications will open for the competition in which participants will vie for this year’s $100,000 prize purse.”

reSET is a non-profit organization whose mission is to advance the social enterprise sector.  Its strategic goals are threefold: to be the “go-to” place for impact entrepreneurs, to make Hartford the Impact City, and Connecticut the social enterprise state.  reSET aims to inspire innovation and community collaboration, and to support entrepreneurs in creating market-based solutions to community challenges.  reSET’s goal is to meet entrepreneurs wherever they are in their trajectory and to help them take their businesses to the next level.

Fledgling "Businesses with Impact" Recognized, Receive Funds to Propel Start-Up

When reSET, the Social Enterprise Trust, whose mission is advancing the social enterprise sector, revealed the winners of its annual Impact Challenge last week, the top award recipient was FRESH Farm Aquaponics, with Movia Robotics, Planet Fuel Beverage Company, Hartford Prints! and Parrot MD rounding out the top five. While the businesses may not be household names, they do represent an increasing number of start-up businesses that are not only seeking a foothold in their respective industries, but are looking to contribute to their community – locally or globally – along the way.

Based in Hartford, FRESH Farm Aquaponics is devoted to providing “the best quality aquaponic food to our community sustainably, teaching a new generation with aquaponics, and engaging the community to develop a local food ecosystem.” The company proclaims “expect from us the best produce available locally, year round in the Hartford County area. You will also see us engaging local schools in pioneering aquaponic experiments from elementary schools to universities.” (see video below)

Planet Fuel is a sustainable lifestyle beverate brand for teens and tweens.  The company's goal is to inspire young people to realize the power of consumer choices to effect social and environmental change.

MOVIA Robotics provides an innovative approach in educating children with autism to "form connections inside the world we live in today." The company uses robots and develops "our own software based on interactions with therapists and children."

Now in its fifth year, the reSET Impact Challenge recognizes the most innovative and impactful early stage ventures and start-ups from all industries throughout New England.  The event, held at The Society Room of Hartford, saw a record, sellout crowd of 300 in attendance.

Diamond Level - $20,000 + Professional Services Package (1 Winner)

FRESH Farm Aquaponics (http://www.freshfarmct.org)

Gold Level - $10,000 + Professional Services Package (2 Winners)

Movia Robotics (www.moviarobotics.com)

Planet Fuel Beverage Company (http://www.planetfuel.com)

Silver - $5,000 + Professional Services Package (2 Winners)

Hartford Prints! (hartfordprints.com)

Parrot MD (parrotmd.org)

People’s Choice - $1,500 + Professional Services Package (1 Winner)

BookBugs (www.bookbugs.net) 

Investor’s Choice - $1,500 (1 Winner)

Send Help Back Home (www.sendhelptoday.com)

Bronze - $500 (7 Winners)

Asarasi, Inc. (www.asarasi.com)

Beautiful Day / Providence Granola Project (www.providencegranola.com)

BookBugs (www.bookbugs.net)

Daily General Counsel (www.dailygeneralcounsel.com)

Dream See Do (https://www.dreamseedo.org)

Hugo & Hoby (www.hugoandhoby.com)

LOTUS Alliance LLC (www.lotusalliance.org)

The five awards judges - Sherrell Dorsey of Uber and Triple Pundit, Adam Dotson of Ironwood Capital, Claire Leonardi, an advisor to reSET's Social Enterprise Investment Fund and former CEO of Connnecticut Innovations, Anthony Price of LootScout and Paul Witinski of Ironwood Capital - narrowed down more than 100 applicants to 12 honorees.  The People’s Choice winner was selected via more than 1,800 online votes.

Since its inception, reSET’s Impact Challenge has awarded more than $180,000 to scaling entrepreneurs. reSET is a nonprofit organization whose mission is advancing the social enterprise sector. Its strategic goals are threefold: to be the “go-to” place for impact entrepreneurs, to make Hartford known as Impact City, and Connecticut the Social Enterprise state.  In addition to providing co-working space, accelerator and mentoring programs, reSET aims to inspire innovation and community collaboration, and to support entrepreneurs in creating market-based solutions to community challenges. reSET’s goal is to meet entrepreneurs wherever they are in their trajectory and to help them take their businesses to the next level.

reSET’s Impact Accelerator recently was a winner of the U.S. Small Business Administration Growth Accelerator Competition, the only Connecticut growth accelerator to receive the award this year.

https://youtu.be/A03RH_htQ88

Multi-State Analysis Finds Big Businesses Dominate in Receipt of State Financial Incentives

An analysis of more than 4,200 economic development incentive awards in fourteen states finds that large companies receive dominant shares: 70 percent of the deals and 90 percent of the dollars. The deals, worth more than $3.2 billion, were granted by programs that are facially accessible to both small and large companies. That is the key finding of Shortchanging Small Business, a study released by Good Jobs First and funded by the Kauffman Foundation and the Surdna Foundation.

“State economic development incentive programs—even those that are facially neutral as to company size or have very low qualifying barriers—are profoundly biased against small, local and entrepreneurial businesses,” the report stated.  “States, which legally enable and regulate incentives (even those administered by local governments) are failing to walk the talk when it comes to valuing small business job creators.”

The fourteen states where the awards were analyzed are Florida, Indiana, Kansas, Kentucky, Louisiana, Missouri, North Carolina, New Mexico, Nevada, New York, Pennsylvania, Vermont, Virginia and Wisconsin. “Our findings definitively confirm what many small businesspeople have long believed,” said Greg LeRoy, executive director of Good Jobs First and lead author of the study.

Connecticut, which launched a Small Business Express loan and grant program aimed specifically at companies with less than 100 employees, was not among the states analyzed in the study.

Priority for available funding in the Connecticut program is  given to those eligible applicants who (1) are creating new jobs and (2) are within Connecticut’s economic base industries, including but not limited to: precision manufacturing, business services, green and sustainable technology, bioscience, and information technology sectors.

From the program launch in January 2012 thru August 2014, published reports indicate that officials at the Department of Economic and Community Development indicated 1,160 businesses have received loans or grants, and have created 4,171 jobs in the state and retained 12,095 existing jobs.  At that time, a total of $234 million had been bonded in the program.  The average loan was approximately $175,000 per company, with a ceiling of $300,000 for any loan.  The total amount of money disbursed was $159.4 million, in three components: $14 million in revolving loans; $83.9 million in job creation loans and $61.4 million in the matching grant program.

In recent years, Connecticut has also provided significant incentives to larger companies that provide assurances of plans to expand operations and jobs.  The First Five program offers select companies approved by the Connecticut Department of Economic and Community Development (DECD) a package of incentives for creating at least 200 new full-time jobs. In addition to the incentives for the first 200 jobs within five years, participants continue to get tax credits for each net new job created after that.

Participating companies include Cigna, ESPN, NBC Sports, Alexion, CareCentrix, Deloitte, Bridgewater, Charter Communications, Sustainable Building Systems, Navigators, PitneyBowes and Synchrony Financial, according to published reports.

Earlier this year, it was reported that Consumer financial services company Synchrony Financial, headquartered in Stamford, plans to create 200 to 400 new full-time jobs in Connecticut. The state, through the First Five program, is providing financial support for the expansion project, with the company eligible for grants of up to $20 million based on hiring targets, with a $10 million grant for the first 200 new jobs in Connecticut.

In the Good Jobs First study, there is slight variation in the degree of big-business dominance among the states (80 to 96 percent of the dollars) but that is meaningless, the study authors contend, since the programs vary as do the industrial demographics of the states. The key finding, they stress, is how consistently the programs grossly favor big businesses.

The study, based on a close examination of the recipient companies, designates businesses as large or small based on their employment size as well as their total number of establishments and whether they are locally or independently owned.

“As a policy solution, we do not recommend simply reallocating deals and dollars,” said LeRoy. “These tax-break deals often mean little to small businesses. Instead, states should disqualify big businesses and use the savings to better fund public goods that benefit all employers and help small businesses with the persistent credit crunch.”

Short of disqualifying big businesses, the report recommends states spend much less on big businesses by using safeguards such as dollar caps per deal, dollar caps per job, and dollar caps per company.

Among the programs included in the analysis are the Vermont Employment Growth Incentive (VEGI), New York’s Excelsior Jobs Program, and the Wisconsin Economic Development Tax Credit.

Manufacturing Businesses, Not Only GE, Being Courted to Move As Fewer Praise CT's Quality of Life

Connecticut’s state government has been working diligently to boost manufacturing and manufacturers in the state, but the latest statewide survey suggests there remain significant obstacles on the road to realizing the goal of growing and sustaining a vibrant manufacturing sector. Among manufacturers, 94 percent handle their production in Connecticut, according to the just-released 2015 Survey of Connecticut Businesses by the Connecticut Business and Industry Association and BlumShapiro. While the survey analysis describes that number as encouraging, it also notes that 28% have production facilities in other parts of the U.S., and 24% in other countries—“which means they may be more likely to consider expanding or shifting more of their production elsewhere.”

The report indicates that the “factors that drive site location include access to key inputs; proximity to suppliers and customers; access to skilled labor; cost of labor; occupancy costs; affordable energy; and where companies are in their life cycle (e.g., mature companies are often likely to disperse geographically to reduce costs).

Although the courting by Governors from across the nation of General Electric’s corporate management has garnered much media and political attention, it is certainly not the only company that is the subject of someone else’s attention.  The CBIA-BlumShapiro report said that one in three businesses surveyed have been approached about moving or expanding their operations to another state.

Of those, the analysis continued, “nearly one in four are planning on moving to that state, 29 percent are considering shifting significant production to another state within five years, and 31 percent are weighing expansion in another state within five years.

Although the report shows that 63 percent of businesses surveyed showed a profit this past year—the best this survey has seen since 2006 - the report indicated that “a primary area of concern” is the expansion of businesses over the next five years, and whether that expansion will take place in Connecticut or elsewhere.

Whether perception drives reality or reality is drives perception, the opinions stated by business surveyed are less than encouraging, according to the report.  Primary reasons cited for moving or expanding outside Connecticut are the state’s high costs (including taxes) and its “anti-competitive business environment,” reflecting an oft-stated CBIA viewpoint.  More than three-quarters say Connecticut’s business climate is subpar compared with other states in the Northeast, and the nation.

The report also noted the significant number of state companies that depend on other Connecticut businesses.  “The vast majority of companies surveyed (70 percent) are somewhat or highly dependent on larger Connecticut companies or businesses,” the analysis highlighted, “which raises concerns when tax hikes threaten to push large companies out of state.”

CBIA’s surveys consistently find that personal reasons also factor significantly in location decisions.  “Many business leaders point to Connecticut’s quality of life and the desire to work close to where they live as the main reason for locating and/or staying in-state. However, we are slipping here,” the report said.

In a survey of Hartford-New Haven-Springfield businesses conducted earlier this year, quality of life—traditionally the number-one benefit to operating a business in this region— surprisingly emerged as less of a competitive advantage today.  In fact, there has been a steady decline in the percentage of company leaders citing quality of life as the greatest benefit of operating a business here: 47 percent in 2009, 43 percent in 2011, 40 percent in 2013, and just over a third (35 percent) in 2015.

CT Among Worst States For Business, Chief Executive Survey Says

Connecticut dropped one slot closer to the bottom of the list in this year’s Best & Worst States for Business, ranked by Chief Executive magazine’s survey of more than 500 CEOs nationwide.  The state was ranked 45^th this year, down from #44 a year ago. Connecticut’s Northeast neighbors were mostly in the same neighborhood on the rankings list, with New York (#49), New Jersey (#47), and Massachusetts (#46) also in the bottom ten, along with Vermont, ranked #41.  In the middle of the pack, Maine was ranked #30 and New Hampshire was #21.

According to Chief Executive, which is published in Greenwich, the results of the 11th annual survey show that CEOs favor states with progressive business development programs, low taxes and a quality living environment.  States are measured across three key categories to achieve their overall ranking: Taxes and regulations, quality of the workforce, and living environment, which includes such considerations as quality of education, cost of living, affordable housing, social amenities and crime rates.

The top ranked states were Texas, Florida, North Carolina, Tennessee, Georgia, Indiana, Louisiana, Nevada and Arizona.  Texas and Florida were also ranked one-two last year.  Texas has topped the list for a decade.  Tennessee and North Carolina traded places from a year ago. 

Among the CEO comments highlighted by the publication:  “A difficult tax structure like the ones in New York or Connecticut makes incentive-giving easy, but penalizes existing businesses. The climate for coming is better than the climate for staying.”

Of a maximum five stars in the CEO ratings, Connecticut received 1.5 for Taxation and Regulations, 3.0 for Workforce Quality and 3.0 for Living Environment.  The data used in determining the states' rankings included state GDP for 2013 vs. 2012, the unemployment rate in December 2014, state debt per capita in 2013, and state-local tax burden.  Key companies in the state highlighted by the website reporting of the survey include General Electric Company, Xerox Company, Aetna Corporation, The Hartford, and Stanley Black & Decker.

Indiana ranked first in the Midwest and sixth nationwide as the best place to do business. It was the only Midwestern state ranked in the top 10.  Among neighboring states, Kentucky ranked 28th, Ohio ranked 22nd, Michigan ranked 43rd and Illinois ranked 49th.  Among the largest moves up the list were Idaho (from #28 to #18), Pennsylvania (from #42 to #35), Iowa (from #19 to #13) and Maine (#36 to #30).

Chief Executive magazine is a bi-monthly publication for top management executives published by the Chief Executive Group LLC., founded in 1977, and headquartered in Greenwich.  According to the publication, state governments use the survey results to help determine how to improve their regulatory environments to attract more businesses, while corporations use the data to decide where to build facilities and attract vibrant workforces.

Last fall, Connecticut economic development officials and leading companies were featured in videos touting the state's efforts to attract and retain businesses.

https://youtu.be/sqNs8aaWpd0

https://youtu.be/CmDCxvRIC3I

As CT Workforce Ages, Employers Look to Attract Young Workers, Seek State Policy Support

The good news:  three times as many Connecticut businesses say they are growing rather than contracting, innovation and investment in technology is strong and three-quarters of manufacturers surveyed say they are exporting. Those are among the lead findings in a survey of Connecticut businesses conducted by BlumShapiro and the Connecticut Business and Industry Association. While the 2014 Survey of Connecticut Businesses shows optimism that Connecticut’s business landscape continues to improve, there remain concerns about the economy and the ability to create jobs in Connecticut, as well as signs that the state’s workforce continues to get older. In fact, one in four respondents are facing a wave of retirements over the next decade, with at least 40% of their workforce aged 55 or older.

“Connecticut’s workforce is aging, with 53% of our respondents reporting that 20% or more of their workforce is 55 or above. There is much to be optimistic about in this survey, but the aging workforce is certainly a challenge we continue to face,” pointed out Joseph Kask, Office Managing Partner of BlumShapiro’s West Hartford office.

While 38% of companies offer flexible work hours, only 8% offer telecommuting. One in four respondents also has specific practices or policies designed to attract and retain younger workers, including internships, tuition reimbursement, high entry-level wages, apprenticeships, and school/college recruitment programs.  Many companies employ apprentices (34%), interns (57%), and temps (58%), and eight in ten companies (79%) plan to hire these workers for permanent positions.

The survey shows slightly greater anticipated demand for mid-level employees than entry level or line workers. Among businesses of all types, workforce demand through 2015 is concentrated on mid-level employees (33% of companies say this is their area of greatest demand) followed by entry-level employees (29%), line workers (28%), managers (8%), and executive leadership (2%).Other highlights of this year’s survey include:

• 35% of businesses surveyed indicate they are growing; 11% indicate they are contracting.
• 46% of businesses surveyed introduced new products or services in the past 12 months; 47% of them plan on introducing new products or services in the next 12 months.
• Three-quarters of manufacturers surveyed are exporting.
• 52% of businesses surveyed say the most important step policymakers can take to enhance business in Connecticut is lowering taxes; 24% say it is reducing regulations, and 11% say it is cutting government regulations.
• 27% of businesses surveyed say technology is the greatest single investment, 23% say it is employee training, and 23% say it is property and facilities.

 When asked how Connecticut should address the shortage of skilled workers, 32% of businesses surveyed say the state should reduce the cost of living, 28% say the state should support trade schools, 20% say the state should support education overall, and 20% say there should be incentive for training programs.

The industries included in the survey include manufacturing, professional services, construction, retail, hospitality/tourism, wholesale, insurance, finance, real estate and software/technology.  Nearly one-third of the respondents were in the manufacturing sector.

CBIA is Connecticut’s leading business organization, with 10,000 member companies.  BlumShapiro is the largest regional accounting, tax and business consulting firm based in New England, with Connecticut offices in West Hartford and Shelton.

High Tech Firms Driving the National Economy; Connecticut Slowed as Other Regions Grew

If you’ve wondered why Connecticut has been devoting significantly increased economic development attention on high tech start-up businesses, encouraging and nurturing their development and offering financial incentives at every turn, a new national report on business start-ups in the sector may provide ample rationale.

High-tech startups are a key driver of job creation throughout the United States, according to research by technology policy coalition Engine and the Ewing Marion Kauffman Foundation. The report, “Tech Starts: High-Technology Business Formation and Job Creation in the United States,” finds that high-tech startups are springing up at a higher rate than all private-sector businesses – and in more places around the nation.   A total of 384 metropolitan areas were analyzed, including four in Connecticut, using comprehensive data through 2010, the most recent available.

Relative to their share of firms in the economy, high tech is 23 percent more likely, and the ICT sector (Information and Communications Technology), as a segment of high tech, is 48 percent more likely, than the private sector as a whole to witness a new business formation.

Though they start lean, new high-tech companies grow rapidly in the early years, adding thousands of jobs along the way, according to the study findings. In fact, high-tech startup job creation is so robust that it more than makes up for the job destruction from early-stage businesses failures – a key distinction from the private sector as a whole where job losses from early-stage failures turns this group into net job destroyers, the report indicated.

However, as the density of high tech firms has grown in metropolitan areas across the country, it has not happened in Connecticut, as data reveals a reduction in the density of high tech firms in the state’s major metropolitan areas during the past two decades.  (The U.S. average is 1.0.)

New Haven-Milford’s start-up density went from 1.1 in 1990, when it was one of nearly 70 metropolitan areas above the national average, to .5 in 2010, while the ICT sector start-up density dropped from above average at 1.2 in 1990 to .5 twenty years later.    The Norwich-New London metropolitan area reflects a drop from 1.1 to .8 in high tech start-up density and 1.1 to .9 in the ICT sector comparing 1990 and 2010.

The data indicate that the Hartford-West Hartford-East Hartford area reflected decreases from .9 high tech start-up densities in 1990 to .6 in 2010, and .8 ICT start-up density in 1990 to .7 two decades later. The Bridgeport-Stamford-Norwalk metropolitan region showed a drop from 1.4 to .9 in high tech start-up density over the 20 year period, moving from above to below the national average, and a parallel drop of 1.6 to 1.1 in ICT start-up density.

The website Engine, which collaborated in the report, observed that “Each of the high density metro areas has one of three characteristics, and some have a combination of them all: 1) They are well-known tech hubs with highly skilled workforces, 2) They have a strong defense or aerospace presence, and 3) They are university cities.”

The report noted that “”high-tech startups are being founded across the country fueling local and national economic growth…and are a pervasive force in communities throughout the country.”  The Top 10 Metro Areas for High-Tech Startup Density (1990 and 2010 data):

1. Boulder, Colo.  (High-tech 4.0 to 6.3; ICT 4.7 to 6.1)
2. Fort Collins-Loveland, Colo. (High-tech 1.0 to 3.2; ICT 1.1 to 2.6)
3. San Jose-Sunnyvale-Santa Clara, Calif.  (High-tech 3.0 to 2.6: ICT 4.4 to 2.9)
4. Cambridge-Newton-Framingham, Mass. (High-tech 2.0 to 2.4; ICT 2.0 to 2.3)
5. Seattle, Wash.
6. Denver, Colo.
7. San Francisco, Calif.
8. Washington-Arlington-Alexandria, DC-Va.-Md.
9. Colorado Springs, Colo.
10. Cheyenne, Wyo.

"This report confirms the dynamism of the technology sector and its disproportionate contributions to the U.S. economy. It also underscores the need for policies that enable and support that dynamism," said Dane Stangler, director of Research and Policy at the Kauffman Foundation.

The report, released earlier this year, used data from the Business Dynamics Statistics (BDS) series, which is compiled by the U.S. Census Bureau and tracks the annual number of new businesses (startups and new locations) from 1976 to 2011.  Ten of the 14 high-tech industries can be classified as information and communications technology (ICT), while the remaining four are in the disparate fields of pharmaceuticals, aerospace, engineering services and scientific research and development.

In explaining the report, Engine noted that “While high-tech firms start small, they scale rapidly in the early years. So much so that young high-tech firms--those aged one to five years--contribute positively to net job creation overall. The opposite is true across the private sector as a whole, where the substantial job losses stemming from early-stage business failures - about half of all firms fail in their first five years - make young firms as a whole net job destroyers. Even when we remove the job destruction from all early-stage firm failures, surviving young high-tech businesses create jobs at a rate twice that of surviving companies in the private sector as a whole.”

Bridgeport-Stamford-Norwalk Above National Average in Sustaining Startups, Study Finds

A new report assessing trends in start-up companies in 40 major metropolitan areas in the U.S. over the past two decades has found that the Bridgeport-Stamford-Norwalk corridor has performed well compared with similar regions in weathering, and rebounding from, the national economic downturn’s impact on the level of start-ups.

The report by the Kauffman Foundation, “The Most Entrepreneurial Metropolitan Area?,” was recently presented to the U.S. Conference of Mayors on Entrepreneurship, the first such conference of municipal leaders devoted solely to exploring entrepreneurship.

In reviewing Metropolitan Statistical Areas (MSA) with a population of between 500,000 and one million people, the report found that the Bridgeport-Stamford-Norwalk MSA placed “toward the top of the group, consistently above the year-to-year changes.”  In addition, the data indicate that Bridgeport-Stamford-Norwalk “did not fall as far during the (economic) downturn, so it appears to have fared slightly better.”

The paper compared the trends in the 40 metropolitan areas with high numbers of start-up businesses to the significant national downward trend in overall new firm formation starting after 2006.  Nationally, the trend reversed and started to recover in 2011. No metropolitan area escaped this downward trend, but there are differences among regions in the timing of the downturn and subsequent recovery.

In counting the number of times that the annual percentage change in start-up density for each of the MSA’s, within the same size class, five of the MSA’s – including Bridgeport-Stamford-Norwalk – were “above average 12 times thorough the period” reviewed. The others to attain that “level of consistency” were Tulsa, OK; Omaha-Council Bluffs, NE-IA; Little Rock-North Little Rock-Conway, AR; and Knoxville, TN.

The report also found that the largest MSAs – those with populations greater than 1 million – fared slightly better through the recession and have experienced slightly stronger recoveries, though none has returned to pre-downturn levels.

The report compared MSAs with relatively larger populations and high startup densities from among the nation’s 366 MSAs.  The MSAs were divided into four groups for purposes of comparison, those with greater than 1 million population, those with 500,001 to 1 million, those between 250,000 and 500,000, and those smaller than 250,000.

The federal government’s Office of Management and Budget (OMB) provides official definitions for MSAs in the United States:  densely populated areas with close economic ties.