In its final day of the 2018 legislative session, the General Assembly approved a bill encouraging more investment in the state's growing bioscience sector.
SB 266 provides a personal income tax exemption for income earned by active managers of venture capital funds.
Paul Pescatello, executive director of the Connecticut Bioscience Growth Council, told members of the legislature's Commerce Committee earlier this year the bill "is perhaps the most important, the most consequential, of the economic development bills before this committee."
Pescatello said two primary factors determine where life research and development and biopharma companies will locate.
The first is the quality of the basic life sciences research of local research institutions and universities.
Connecticut is fortunate to have several leading life sciences research institutions, Pescatello said.
"The quality and quantity of research grants and projects ongoing at Yale University, the University of Connecticut, and at many other Connecticut colleges and universities provides us with many opportunities to root new biotech ventures Here," he said.
The second is access to venture capital.
"Because biopharma companies require such large investments of capital and time—to bring a new medicine from research concept through FDA approval takes $2.6 billion and 12 years—their venture capital investors tend to require the companies they invest in to be in close proximity to their offices," Pescatello said.
That's why the tax exemption in SB 266 is a powerful incentive for venture capital migration to Connecticut, he said.
SB 266 is perhaps the most important, the most consequential, of the economic development bills this year.
"It would be difficult for competitor states like Massachusetts, California, and New York to match a Connecticut venture capital income exemption because those states do derive significant income from venture capital personal income taxation," Pescatello said.
"Our cities would grow organically to be more like the urban areas with which we compete—Boston, San Diego, San Francisco—if we attract venture capital firms to Connecticut and, with them, their biotech company investments."