But Richard Horan, who directs the fund, says the state’s commitment to the initiative is ‘admirable’
The Slater Technology Fund, created in 1997 as a way to provide technology startups with a way to break into business, is “woefully under-funded” to the point where the state should be embarrassed, says a local economist.
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“Rhode Island’s glaring deficiency is we don’t have critical mass in high-technology,” said Leonard Lardaro, a professor of economics at the University of Rhode Island who first made his comments on local radio.
But Richard G. Horan, senior managing director of the fund, said the intention of Slater is to provide seed-stage venture development, a task that it has performed admirably through the years.
“For the challenge we face, doing seed-stage venture development, the level of funding has been reasonable,” Horan said. “The fact that it has been sustained … since the program was launched in 1997 is admirable.”
Despite those efforts and legislative funding, Lardaro said directing more money into the fund will allow the Ocean State to reach a “critical mass” of high-technology companies.
“The Slater Funds really give us a chance to fund some small companies who might eventually be successful and bring other firms in,” Lardaro said. “The (Slater) funding went from $4 million a few years ago to $3 million, which is a disgrace to the people of this state.”
Technology jobs are an integral part in ensuring Rhode Island has sufficient jobs in the future, Lardaro said.
“We actually outperformed the national average for jobs in the late 1990s for all the wrong reasons,” Lardaro said. “While other states were losing dot-com jobs, our health services, tourism and nonprofit sectors were booming. Any state with a big presence in high-tech got nailed. We had nothing to lose.”
While Lardaro said the Slater Fund isn’t the only answer to fostering growth of high-tech companies, he emphasized that more money needs to be in the fund to do its job.
“We have all this money allegedly coming in from expanding slots (machines) … and we’re going to eliminate the car tax?” Lardaro said. “Why hasn’t anyone asked if that’s the best way to use that money?”
Instead of using slot-machine revenue to alleviate the car tax, perhaps the state should consider funneling more of that money into Slater initiatives.
“It seems like $3 million is absurd,” Lardaro said. “It should be closer to $15 million.”
Horan said there’s little doubt that Slater could benefit from additional capital commitment.
“It’s long been the goal to get an annual appropriation of $5 million,” he said. “But the level of $3 million a year since it was founded has been a reasonable and admirable investment.”
To further build this entrepreneurial sector requires more than an increase in funding through Slater, Horan said. Slater serves as the first point of commercial funding for a company.
Successive rounds of funding are primarily awarded by out-of-state venture capital firms, Horan said, because there are so few of those companies in Rhode Island.
However, Horan said Slater continues to work with companies during their quest for additional rounds of funding. One company that spun out of Brown University, Spherics, got a jump-start with $250,000 in funding from Slater.
“They’ve gone on to raise $4 million in Series A financing, $10 million in Series B and $25 million in Series C,” Horan said. “Slater recovered its investment in Spherics.”
In 2003, the Legislature provided Slater with $2.5 million; $4 million in 2004; and $3 million this year.
Horan said this year’s legislative session provided a good dialogue among leaders regarding the fund’s importance.
“I am actually gratified to see the General Assembly approving funding based on past practice. It’s a vote of confidence,” Horan said.
