Proof-of-Concept Fund Frequently Asked Questions (FAQs)

What is the Proof-of-Concept Fund? Who is funding it?

The Proof-of-Concept Fund is a pilot program operated by Connecticut Innovations, based on legislation PA 18-178—sHB 5590, led by Senator John Fonfara. The program was created to provide a new source of potential funding for Connecticut companies in their early stages that have reached a point in their business concept or technology development where additional capital is needed to complete research, testing and/or other activities to demonstrate the validity and potential of the business. The fund is highly competitive, with  investments of $50–100K in 15 to 25 companies a year.

Is this funding an investment we would have to pay back, or a grant?

Proof-of-concept funding is an investment by Connecticut Innovations—not a grant. Investments will be in the form of a standard entrepreneur-friendly convertible note.

What size are these investments? How are the terms of repayment defined?

Amounts will range from $50,000 to $100,000 in the form of a convertible note, which will be either repaid or converted into equity when the next round of funding is completed. No personal guarantee is required. The program has a pay-it-forward mantra whereby we hope founders will return the capital so we can reinvest the returns in the two additional founders.

What types of companies qualify for proof-of-concept funding?

We are looking for Connecticut companies planning for substantial growth in fundraising, revenues and high-paying jobs. We are seeking founders needing outside investment to validate the growth potential of their core concept or technology.

While the program is open to all businesses, preference will be given to innovation-based businesses, including information technology, cleantech/greentech, advanced manufacturing and bioscience/biotechnology companies.

How does my company begin the process?

To begin the process, please submit requested information here. You will be contacted by Connecticut Innovations staff within one week. The form requests an investor deck and financials, as well as an optional business plan.

What should be included as part of the investor deck?

The investor presentation can be in various formats and should include references to the company’s leadership and team, company and technology/product, value proposition and anticipated outcomes of funding impact, target market size, go-to-market strategy, business model, project plan and associated budget.

How should I prepare my financials?

Financials should include the most up-to-date balance sheet, cash flow and income statements. Companies should also provide a forecast detailing sources and uses of funding.

Is a business plan required? What should it include?

Providing a business plan is optional. Business plans take many forms, but should at a minimum include an executive summary, value proposition and business structure, market strategy, details about the leadership team and the financial state of the company. This is an excellent tool every entrepreneur should create at some stage.

How long does the process take, from initial contact to when we learn if we are approved?

Once your materials have been submitted, you will have an initial response from a member of the CI team within one week. If we enter into due diligence, the investment process can take anywhere from 3.5 to 24 months (as is the case with almost all investment firms). The length of the investment process depends on the team’s relevant experience, market size, uniqueness of the product offering, the value-add of the proof-of-concept investment (i.e., will successful completion be sufficient to raise follow-on capital) and many other factors. CI’s investment team applies early stage due diligence to better understand the founder and the opportunity at a deeper level. The due diligence process also helps prepare the founder for the next round of funding.

Do you require a cash match from another funding source or sources?

No cash match is required, but it is preferred when possible.

What are the terms of the convertible note?

A sample of a promissory note can be found here. Please note this document is subject to change.