Connecticut's High-Tech Entrepreneurs Optimistic Despite Market Challenges

Emerging High-Tech Sector Comparable in Size to Fortune 500 Company

Rocky Hill, Conn. May 22, 2001 - Connecticut's emerging high-technology companies project continued steady growth despite the most dramatic economic downturn ever faced by Internet-era companies, according to a new Economic Outlook Survey released today.

The study, co-sponsored by Connecticut Innovations, the state's high-technology investment arm, and PricewaterhouseCoopers, indicates that the sector employs 61,000 people in the state, and that number is projected to increase to close to 70,000 by the end of 2001.

Emerging high-technology companies, defined as those with fewer than 500 employees whose sustainable competitive advantage is based on technology or technology expertise, now number close to 1,400, according to the study. Of the senior executives participating in telephone interviews, representing 101 companies, 68% projected revenue growth and 53% predicted an increase in employment in 2001.

"This research confirms that our high-tech entrepreneurs continue to build exceptional companies, even in difficult market conditions," said Victor Budnick, president and executive director of Connecticut Innovations. "Our high-technology entrepreneurs are demonstrating the blend of optimism, tenacity and vision that will serve their emerging companies, and the state's economy, well."

Tim Reilly, partner-in-charge of PricewaterhouseCoopers' Connecticut Technology Practice, added, "These companies had combined projected revenues of nearly $8 billion in the year 2000, and are forecasted to reach $10 billion in 2001. Their combined 2000 revenues are equivalent to the revenues of Apple Computer, a Fortune 500 company. Their total employment numbers - 60,000 people -- equate to the entire population of Bristol or Meriden. And they occupy more than 12 million square feet of commercial space - roughly 17-1/2 times the size of New Haven's Long Wharf Maritime Center, and almost 23 times the size of Westfarms Mall in West Hartford.

"That," added Reilly, "represents a significant force in Connecticut's economy."

Innovation Powers Growth

Survey data produces a profile of the Connecticut entrepreneurial, high-technology company as one powered by research and innovation. More than three quarters - 78% -- have introduced new products since 1998, and those companies have derived 39% of their revenues from new products. An equal number - 78% -- plan to introduce new products in 2001.

The companies participating in the survey project that an average of 16%, or a total of $1.5 billion, of revenues will have been spent on research and development in 2001.

Projections Reflect Market Conditions

While the Economic Outlook Survey reflects solid growth in the sector, projections are somewhat less ambitious than those resulting from a similar survey conducted in the summer of 2000. Total employment had grown from 48,000 to 61,000 over a six-month period, but projections for employee growth in 2001 were reduced significantly, from 15,000 to 8,800 in the current study. Revenue projections also reflected current market conditions, with earlier estimated 2001 revenues of $13 billion being downsized in the current survey to $10 billion. The projections, however, still reflect a healthy increase of $2.1 billion over 2000 revenues.

Study Population

Of the 101 companies studied, 90% were privately held. They employ an average of 45 people. Average revenues were $5.8 million. While the survey population represented the entire state, 77% of the companies are in Fairfield, Hartford and New Haven counties.