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Connecticut Climate Ripe for Energy Technology Investment

October 2005

Authors: Donna L. Brooks

Like elsewhere in the U.S., Connecticut’s renewable energy markets are currently growing. Connecticut’s innovative new financing methods provide venture capitalists with attractive opportunities driven by the strict new renewable portfolio standards.

The Connecticut Clean Energy Fund, established by state statute, offers attractive financing for the commercial demonstration of renewable energy projects. Financing is available for site design, equipment procurement, permitting, installation, testing and site restoration of a renewable energy project at a specific commercial site. Repayment of the financing is contingent on commercial success of the project. The Fund retains the right to earn royalties on projects achieving commercial success. The ability of a project to secure a commercial trial is a valuable means of introducing new renewable energy products into the mainstream market and provides outside investors with assurances of a tested venture.

Additionally, in July 2005, Connecticut’s Governor signed into law two bills designed to encourage research, development and commercialization of new technology. Public Act 05-165 calls for the development of a plan for an "Innovation Network" directed at improving the process of applying research and new technologies in business. The purpose of the bill, and a mandated focal point of the plan, is to encourage private investment in Connecticut technology and manufacturing. Among other things, the Innovation Network is to establish linkages to angel networks and business incubators in Connecticut. Public Act 05-129 calls for Connecticut Innovations to manage a new fund with up to $50 million in committed private capital from investors including pension funds, foundations and private entities, with the State providing a limited first loss guaranty. This "Connecticut New Opportunities Fund" will invest in Connecticut "seed stage" and "emerging growth" companies that have had trouble attracting venture capital funding in the past.

These and other initiatives reinforce Connecticut’s commitment to increasing its competitiveness through energy efficiency and reduced energy costs. Substantial opportunities exist for venture capitalists in these markets in partnership with the State of Connecticut. Shipman & Goodwin LLP is well-positioned to assist both emerging companies and investors by the strength of the combined experience of its Energy and Ventures and Intellectual Property Groups.

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