A High-Finance Guru Takes On a High-Risk Job For Malloy

It looks like just another political appointment, a well-connected person heading a high-profile state agency in a newly created job.

But the installation of Claire R. Leonardi as CEO of Connecticut Innovations Wednesday morning, just before Gov. Dannel P. Malloy's speech to open the legislative session, marks Malloy's shift in technology investment — not just into high gear, but into a 200-mile-per-hour turn at the Daytona speedway.

Leonardi, with a gold-plated resume in finance, will effectively be the chief investment officer of a fund that could plunk down upwards of $100 million a year in Connecticut firms. Many will be emerging companies that still have no product and are just getting their first real cash.

Until now, the state has invested just a few million a year in startups — zero in at least one year during the last decade.

It's high risk, with taxpayer money. It works in theory, as Malloy says it: Connecticut must nurture companies that represent potentially explosive job growth in new technologies. But the $100 million question is whether Leonardi can drive this thing responsibly, without crashing into that wall.

It takes a huge effort just to cut one good deal, with partner investment firms, licensing, vetting of the principals and all sorts of other details. Now we're talking about dozens of deals a year.

Leonardi, 56, has spent most of her career in venture capital and fund investing, with stints at very large and very small firms, and she holds an MBA from Wharton at the University of Pennsylvania. She's a former vice chairwoman on the University of Connecticut's board of trustees, and headed the UConn Health Center board.

Leonardi, an unaffiliated voter in downtown Hartford (formerly a Harwinton Republican) is married to state Insurance Commissioner Thomas Leonardi, a venture capitalist himself — so we clearly have the public sector's power couple of finance.

Leonardi joins forces with Catherine Smith, the state Economic and Community Development commissioner who's also chair of the CI board. Leonardi said all the right things in a canned statement issued Wednesday — "We have a great opportunity to leverage Connecticut's significant intellectual talent, driven by our academic institutions and industry resources across a vast array of growing sectors" — but, again, the issue is whether the target firms are out there.

With a salary of $198,000, Leonardi would not only head CI, but also the Connecticut Development Authority, which lends about $20 million a year, mostly to established companies, and floats about $30 million a year in bonds for economic development. That merger needs legislative approval, which is likely to happen quickly.

"This is a positive step for economic development in Connecticut. This is what Connecticut businesses have been asking us to do," said Marie O'Brien, the 7-year veteran president of CDA.

If O'Brien was miffed about the prospect of reporting to a person, rather than a board, she didn't show it in the least. Her own high-powered background in corporate and other management melds well with Leonardi's hardcore financial experience.

Wednesday's appointment wasn't Malloy's and Smith's first shot at a new person to head the existing staff at CI, which includes Peter Longo, who runs day-to-day operations at the investment agency. Last June, Matthew Nemerson, president and CEO of the Connecticut Technology Council, the industry group, was presented to the CI board. But Malloy and Smith hadn't gone through the paces, and some board members balked even though Nemerson is a widely respected economic development executive.

With Leonardi in charge, the place becomes a full-fledged venture capital house, but with a tough set of restrictions. It's not enough to make money for us, the investors. CI has to create jobs in its home state, a state that has simply not bubbled up enough new startups for all this money to find safe homes.

Malloy is injecting $125 million over the next five years to CI's investment budget, making the fund big but not huge by venture capital standards, Ben Barnes, Malloy's budget chief, pointed out Wednesday. "It's going to be a challenge to step up our capacity to do it well, but that's why we're bringing great people in," Barnes said.

Too much, too soon? No, said Larry Cafero, the GOP state House leader and a frequent critic of Malloy's. "It's a great idea," Cafero said Wednesday, "but when you invest money, you have to make the books balance, because that's what got us into trouble in the past."

The car will hit the wall on occasion with accidents that look dumb in retrospect. Cafero advises us to look at the big picture.

But even on Honeymoon Day at the Capitol, he couldn't resist taking a few shots at Malloy deals — $20 million for UBS in Stamford to "only" reduce its staff to 1,500. And oh yes, $291 million for Jackson Laboratories at the UConn Health Center.

That's the same UConn Health Center where Leonardi headed the board. Let the fun begin.

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