By this point the Slater Technology Fund was supposed to have largely broken free of the state funding that created it and, with $9 million in federal stimulus, started down a path to self-sufficiency.
That was the plan drawn by Rhode Island’s political and economic-development leaders, who helped secure federal money for the nonprofit venture-capital firm at least in part so they could cut back its annual state appropriation.
Since the announcement of the $9 million award in 2011, Slater has followed through with investments in some of the Providence area’s most promising technology companies, a few of which have also drawn multimillion-dollar outside funding.
But while Slater’s state appropriation has been cut each of the last three years, it has received only $1.9 million, or less than one-quarter, of the $9 million in expected federal grants.
A U.S. Treasury review of how Rhode Island is investing its award under the State Small Business Credit Initiative, including Slater but especially with startup accelerator Betaspring, has put the bulk of the state’s $13.1 million award on hold.
That in turn has hindered Slater’s ability to raise the private investment needed to chart a course toward eventually operating without annual government support.
Private fundraising “has been delayed because of the uncertainties with respect to [the $9 million federal award],” said Slater Senior Managing Director Richard Horan. “Until such time as uncertainties are resolved, the delay in private-sector formation will persist,” he said. “Suffice to say resolving those uncertainties has been one of our most important priorities in the past three to six months.”
Compliance concerns about how Rhode Island used its SSBCI funds were identified in a state-commissioned audit by consultants Lyon Park Associates and subsequently handed over to Treasury officials.
Questions about Rhode Island’s $2 million investment in Betaspring turned on whether accelerator services qualify as private investments under the federal program. Lyon Park’s more modest concerns with Slater delved even further into the realm of accounting issues.