New Haven leads Connecticut startup momentum in Q1

The 25 Science Park building in New Haven, Conn., where Kleo Pharmaceuticals is developing a platform that “recruits” the immune system to fighting cancer cells. The 25 Science Park building in New Haven, Conn., where Kleo Pharmaceuticals is developing a platform that “recruits” the immune system to fighting cancer cells. Photo: Alexander Soule / Hearst Connecticut Media Photo: Alexander Soule / Hearst Connecticut Media Image 1 of / 5 Caption Close New Haven leads Connecticut startup momentum in Q1 1 / 5 Back to Gallery

Connecticut startups benefited from a healthy rebound in growth financing from venture capitalists and other investors, with 18 companies disclosing $1 million or more in funding to equal the highest number in any three-month stretch the past five years.

In filings to the U.S. Securities & Exchange Commission between January and March, Connecticut companies reported raising $109 million in the aggregate, more than five times what they secured in the first quarter of 2018. Hearst Connecticut Media tracks venture capital and other forms of growth funding of at least $100,000, while omitting amounts raised by publicly traded companies, financial firms such as hedge funds, or money used to underwrite the cost of acquisitions.

Largely, companies use those funds to develop new products or services or otherwise expand sales, often resulting in new hiring. Connecticut was coming off a 2018 in which venture funding tailed off 44 percent to $222 million, with about 25 fewer companies reporting financing compared to the year before.

Connecticut’s venture-capital spigot opened up anew in the first three months of this year, particularly in the New Haven area where more than half of the state’s venture funding totals flowed. That extended to seven of the past nine quarters during which that has been the case, as investors have lined up to back life sciences spinouts of Yale University such as Arvinas and Biohaven Pharmaceuticals, both companies having since held initial public offerings of stock.

New Haven-based Kleo Pharmaceuticals led all Connecticut companies in funding, filing SEC notice of the transaction in January after a November announcement it had secured $21 million. Leveraging breakthroughs by Yale University scientist David Spiegel, Kleo is developing synthetic compounds that “recruit” the immune system into destroying cancer cells.

Speaking in February at the Bio CEO & Investor Conference in New York City, Kleo CEO Doug Manion said the company is eyeing the second half of 2020 for initial clinical trials.

“The drugs are smaller, they’re much more ‘tunable’ — so the cycle time for discovery is much shorter (and) manufacturing would be much simpler,” Manion said. “This is a modular technology so once an effective mechanism works it’s a matter of relatively simple chemistry for (drug developers) to link it to one of the many tunable linkers in our library.”

Mutualink reported Connecticut’s next highest total at $16 million, representing the second half of a $30 million commitment from investors announced early last year. The Wallingford company sells an emergency notification system that can ping alerts and updates to myriad devices, with the company’s customers including the state of Connecticut.

East Windsor-based Foresite led Hartford-area companies with $10 million in new funding, with the company managing digital security on an outsourced basis for corporate clients.

And Rhone Apparel reported the highest total in Fairfield County at $9 million, with the Stamford company selling shirts of varying materials with cooling and odor-free properties designed to be worn during athletics as well as on an everyday basis.

Last week, the Stamford-based online audience measurement startup Tru Optik reported raising $10 million in funding, without immediately filing any disclosure with the SEC.

Other significant first-quarter deals in southwestern Connecticut included a pair of financial tranches totaling $2.7 million for the Fairfield-based importer of Broken Shed Vodka distilled in New Zealand.

Includes prior reporting by Luther Turmelle.

Alex.Soule@scni.com; 203-842-2545; @casoulman