Where We’re Headed: Insights from the CI Investment Team
What will you focus on in 2025?
Given its ability to analyze large amounts of data, identify patterns, automate tasks and improve efficiencies, it should come as no surprise that artificial intelligence will play a prominent role in the deals that CI is looking into. “AI is a focus, especially in its application to specific industries,” says Peter Longo, CI’s senior managing director of investments. Longo is watching for opportunities to invest in AI solutions that target well-defined problems rather than general-purpose AI companies. “Targeted vertical applications will have the most immediate impact,” Longo explains.
Douglas Roth, managing director of investments, says he’ll continue to invest in areas where Connecticut has an edge. “Industries where the state has an unfair competitive advantage, such as insurtech, fintech, advanced manufacturing and the biosciences, remain areas of focus,” he says. “Given Hartford’s position as the insurance capital of the world, we believe the city is in the unique position to support the next generation of insurance innovation.” Roth sees potential in insurtech innovations using AI, creative business models and new sources of data. “The insurance and financial services industries are highly regulated, and can sometimes move slowly, but the industry players recognize that innovation is inevitable,” he says.
Like Longo, Roth is betting on AI as it pertains to specific applications. “The kinds of opportunities we’re looking at in ’25 are novel uses of AI, particularly those trained on proprietary datasets solving acute problems in the market.”
Roth also notes Connecticut’s progress in quantum computing, particularly as it moves from scientific theory into practical engineering applications, though he believes the field won’t reach commercial viability just yet. “I’m confident we’ll get there,” he says, “but the foundational science needs to advance before we see products entering the market.”
Daniel Wagner, a senior managing director of investments at CI responsible for evaluating healthcare and life science opportunities, says the life sciences side—pharma, biotech, tools, diagnostics and health tech—will remain consistent. “We have all the talent we need for these vertices right here in the state, including top scientists, engineers, regulatory professionals and quality control folks,” Wagner says, adding that identifying and retaining corporate and scientific leaders remains a focus. He stresses, though, that tech is a “virtual game.” “Teams are increasingly spread far and wide and companies can enter the market faster than ever before.”
On the climate side, Konstantine Drakonakis, who serves as CI’s managing director of investments for climate and adaption technology ventures, is interested in climate tech like green chemistry and green molecules, as well as sustainable energy. “With its research-driven institutions like UConn and Yale, Connecticut has the talent and resources to push forward in green chemistry and the replacement of petroleum-based products in industries such as health, beauty and fragrance,” says Drakonakis. He’ll also focus on energy, particularly new sustainable fuels for aviation and maritime applications that will replace fossil fuels by leveraging captured CO₂ as a feedstock.
Drakonakis is further interested in innovations related to the circular economy, which involves upcycling waste to make new products. The concept is gaining momentum in Connecticut’s climate tech cluster thanks to the ACW cluster supported by Climate Haven. Drakonakis notes a recent CI investment in Nimbus Power Systems, which was born out of an idea from professionals formerly with UTC that aims to revolutionize fuel cells with a next-generation technology and expanded applications.
What advice would you give entrepreneurs looking to secure funding in 2025?
“Make sure you’re solving a real problem,” says Drakonakis. “It should be one for which companies and people are already clamoring for a solution.”
Longo says to “be persistent” and use your network to get introductions.” For him, a warm introduction is key to securing funding, especially in today’s cautious investment climate. He encourages founders to be proactive in connecting with investors and leveraging their relationships to open doors.
Roth emphasizes the importance of a strong, clear pitch that addresses a specific need. “If you’re a dynamic, charismatic entrepreneur and can clearly communicate a market need, you improve your chances that investors will listen,” he says.
Wagner advises entrepreneurs to be “crafty” with their funding approach. “Early-stage funding is difficult to secure from institutional investors, so founders should explore alternative sources such as smaller funds, individual investors and strategic partnerships.” He also stresses the importance of being cautious with cash management to stay resilient in a challenging funding environment.
Are there any other technologies you're watching?
Drakonakis says he’s interested in fintech solutions that can help mitigate adverse impacts on the environment, such as building-management systems that help save on energy costs, as well as innovative insurance products that address climate change. He’s also encouraged by technology out of Yale University that is removing carbon dioxide from wastewater—Crew Carbon is a recent investment—as well as Yale’s Planetary Solutions program, which focuses on clean air and water, as well as resilient ecosystems. Agricultural innovations that boost crop yields and create healthier produce with fewer contaminants are another area Drakonakis is looking at. “Both Yale and UConn are developing innovations and entrepreneurs that are focused on sustainable fuel and fertilizer technologies,” he says.
For Longo, artificial intelligence as it relates to fintech applications is a particular focus. “I’m interested in how AI can be used to democratize people’s ability to invest their money in a smart way. The use of AI to detect fraud is also something I’m looking at.”
Roth is closely watching developments in fintech and insurtech, noting that the right AI applications can have a significant impact on consumers, potentially altering actions that lead to improved financial outcomes or safer behavior. He also sees opportunities for AI to identify profitable potential customers. As it pertains to education, he sees potential in AI’s ability to identify at-risk students, who can then be flagged for early intervention.
Wagner, while noting that AI is “everywhere” across many investments, is cautious about the technology’s current ability to deliver returns. “AI’s profitability has yet to materialize in CI’s existing investments or in recent local fundraising efforts,” he says.
Anything else you want Connecticut entrepreneurs to know?
“Climate tech is a lot like deep tech in that it is enabling technology,” says Drakonakis, noting that this sector often requires significant time and capital before reaching market maturity. “You have to find investors with a patient, long-term mindset who understand the gradual path to adoption.”
Longo is cautiously optimistic about a post-election increase in deal flow, though he doesn’t expect activity to return to the level it was in 2021. “Now that the election has been decided, funding will be more accessible,” he says. “Deals will flow again, though likely not as many as we saw a few years ago.”
Roth believes the market is at an “inflection point,” with Series A funding rounds becoming more selective and terms increasingly favoring investors. He warns of a possible “Series A crunch” as capital for early-stage rounds remains limited, and advises founders to secure alternative funding sources and to be prepared for challenging negotiations. He also highlights the growing backlog in the IPO market, which is delaying liquidity and making it harder for startups to secure large expansion rounds. “It’s like a four-lane toll highway with only one toll-booth operator,” Roth says. “There’s a backlog. Until it opens and VC firms get liquidity to free up expansion, it will continue to be a challenging time to raise money.”
Wagner notes that risk capital has yet to return to the seed and early Series A rounds, with only very large early-stage rounds getting funded. He sees this as a major barrier for startups, as the absence of small, risk-friendly investments makes it harder for emerging companies to gain traction.