Venture Capital Expert Sees Promise in Yale Entrepreneurial Endeavors

According to Mike Roer, Connecticut is one of the nation’s top sources of venture funding, but only a sliver of the money that originates in the state — much of it from Fairfield County’s Gold Coast — gets invested with entrepreneurs here.

“There is a great deal of wealth here,” Roer, the executive director of the Connecticut Venture Group, said when he spoke to the SOM Entrepreneurship Club on November 8. “But there is a net outflow from the state. If we can do better, there are great opportunities because the money’s there.”

Roer cited two initiatives at Yale as examples of the sort of programs that could build crucial momentum for venture capital in Connecticut: the Yale Entrepreneurial Society (YES) and the Yale Entrepreneurial Institute (YEI). The YES, which started in 1999 to encourage student entrepreneurs, sponsors an annual competition called Y50k, which provides cash to business plan competition winners. And YEI, which launched this year and is co-sponsored by SOM, runs a “boot camp” for aspiring entrepreneurs in the summer, providing a stipend, office space, and a series of speakers who can provide advice and networking opportunities.

“I can see the Y50k becoming the Y120k, even the Y500k in another five years,” Roer said. “And what I like about the YEI is that it might help offset the venture capital perception that a student isn’t as bankable as someone with gray hair working on his fifth deal.”

Founded by venture capitalists, the Connecticut Venture Group works to encourage investment in high-growth ventures in the state. Recently, Roer has been pushing some bigger firms to invest in a fund aimed at Connecticut start-ups, as a way of overcoming one of the major hurdles that venture capitalists face when investing in early-stage companies. “Over the long term, early-stage funds outperform late-stage funds,” he said. “The problem is, VC firms can’t pay back their investors unless they can cash out their portfolios, typically within five to seven years. VC firms have a love/hate relationship with early-stage companies. They’re looking for proven concepts.”

Roer encouraged the students in the audience to think about careers funding young companies. “I have a hidden agenda here today,” he said. “I hope some of you move into venture capital and start a good seed fund.”