Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

March 25, 2020

As CT Innovations seeks to shield portfolio from COVID-19, CEO McCooe may have the virus

HBJ Photo | Steve Laschever Matt McCooe, CEO of Connecticut Innovations.
By Matt Pilon

Connecticut Innovations CEO Matt McCooe dialed in to a telephone board meeting Tuesday morning to discuss the quasi-public venture investment firm’s emergency game plan for shielding as much of its $144 million portfolio as possible from the coronavirus’ economic shockwaves.

As board members and staff waited for the final stragglers to call in, McCooe had urgent news to share:

“Someone I interviewed this week has COVID, so I’m scrambling to get myself a doctor’s appointment and get myself into quarantine as fast as I can,” McCooe said.

McCooe found out just before the call that a job candidate he had interviewed last Thursday at an executive recruiter’s office had tested positive for the virus. McCooe did the interview in person because he said it was a highly desired candidate, and they practiced social distancing during the interview, but the “critical error,” McCooe recalled in a phone interview Wednesday morning, was likely letting the man try out his electric bicycle after the meeting.

McCooe was tested at a Yale New Haven Health drive-up facility in Milford on Tuesday afternoon, and expects to get results back within a few days. He said he has some symptoms of the virus, including tightness in his chest, a dry cough, and some dizziness, but no fever.

McCooe has no plans to stop working. After sharing his news with the board, it was straight to business.

There are about 180 companies in Connecticut Innovations’ investment portfolio, and like in almost any other sector of the economy, many of them are feeling or anticipating some level of financial pain from the ongoing COVID-19 coronavirus pandemic.

Already there’s been job losses and furloughs, and many companies are expecting that additional fundraising will be difficult or impossible over much of 2020, or possibly longer.

“The conventional wisdom our companies are adopting is it will be hard to raise an outside round, and if you do, the valuations may be lower than what you had expected,” McCooe told the board.

Now, portfolio companies are asking CI for a lifeline, and the agency plans to deliver as much as it can. The plan is to approve $20 million in investments for up to 50 companies (current portfolio companies as well as new additions) over the next 100 days.

That funding will be seperate from a $20 million small business bridge loan program the state of Connecticut is currently planning. 

McCooe said that many of CI’s portfolio companies that have asked for a lifeline so far will be getting one. CI will be careful not to prop up any firms that weren’t meeting fundraising or customer targets before the outbreak.

"I don’t think now is the time to be throwing good money after bad,” McCooe added.

While its equity portfolio, which stands at about $114 million, is larger, CI is also concerned about its roughly $30 million loan portfolio.

On Tuesday, board members voted to authorize CI to offer a moratorium on borrower payments of up to one year.

”It’s not a huge expense to allow these companies to work through this crisis,” said Dave Wurzer, CI’s chief investment officer. ”If everybody took advantage of this, the cost to CI is less than $200,000.”

Aside from its own portfolio, CI is going to be playing a key role in a broader state assistance program that is expected to launch as early as Wednesday.

CI will manage much of the bridge loan program, which is expected to dole out 0% interest loans of as much as $75,000 to Connecticut businesses.

While there is sure to be lots of demand for the program, McCooe said it may not be a good fit for venture-backed companies like those in CI’s portfolio, and the same may be true of U.S. 

Small Business Administration disaster loans, depending on the exact terms of each.

Any assistance that requires a personal guarantee by the borrower would be a problem for venture-backed firms, which often have multiple (usually wealthy) owners with relatively small stakes in the company. It could potentially mean borrowers put their homes and personal wealth at risk.

“I don’t know a single VC company in our portfolio who would want to take advantage of that,” McCooe said. “My guess is all of the CI companies will come back to CI because we don’t have that feature in our language.” 

Sign up for Enews

Most Recent

Most Recent

0 Comments

Order a PDF