State Picks Missouri Firm to Handle Fund

Advantage Capital Partners has selected Ironwood Capital to identify potential companies for investments:

Connecticut has chosen a Missouri-based equity and venture capital firm to manage a $72 million investment pool aimed at growing small businesses.

The new funds come out of a provision in the recently passed jobs bill, which revised the state’s Insurance Reinvestment Tax Credit program to allow money managers to invest in any Connecticut-based business, not only insurance-related ones.

St. Louis-based Advantage Capital Partners, which was certified by the State Department of Economic and Community Development to manage funds raised from insurers doing business in Connecticut, selected Avon-based Ironwood Capital to identify potential companies for investments.

Twenty-five percent of the investments must be committed to green technology efforts, while 3 percent must go toward pre-seed investments.

The money is created in a sense by waiving taxes on insurance companies.

Instead of paying taxes on insurance-premium income to the state, insurers can put the money into a fund that will invest in local companies. The insurers also receive a tax credit for the investment depending on how the investments go. The instrument is also known as a CAPCO fund.

Marc Reich, president of Ironwood Capital, said Advantage Capital is one of the nation’s authorities on CAPCO investing, and he expects the fund to grow to about $100 million in the first quarter of 2011.

“Fresh capital has been in short supply for smaller businesses,” he said.

To be considered for an injection of capital from the fund, a company must have 250 or fewer employees, at least 80 percent of whom are paid in Connecticut. There are also income limits.

Gov. M. Jodi Rell said in a statement Wednesday the program especially will help new businesses get access to startup funds.

“With the changes that we made to the Insurance Reinvestment Tax Credit program, there will be a much-needed infusion of investment dollars into our state to support business formation and growth, as well as strengthen our high-tech work force,” she said. “I expect that this program will be paying important economic dividends for years to come.”

Advantage Capital Partners is a group of venture capital partnerships that has raised more than $1.3 billion since 1992.

View Original Article