Can a $50,000 loan convince a promising technology startup to locate in Providence for at least a year, maybe permanently?
The city and three prominent Rhode Island investment groups think it can and are already in late-stage talks with as many as nine emerging entrepreneurs interested in the newly launched Providence Innovation Investment Program.
The program, established with a $1 million grant from the U.S. Department of Housing and Urban Development, is designed to leverage the bets already being made in emerging companies by Rhode Island investor-accelerators Betaspring, Slater Technology Fund and Cherrystone Angel Group.
Under the program, the startups and early-stage companies those three partners are mentoring or investing in will be eligible for the $50,000 loans, which are conditional on the companies locating in Providence for at least a year.
While many other cities in the country have business incubators, mentoring programs and privately run investment funds, Providence officials believe this new program is unique in the way it uses public capital to harness private expertise.
“They have experience weeding out companies on the startup level,” said Providence Economic Development Director James Bennett about the role of the three investment groups in the Innovation Investment Program. “They come from the venture world and can move a lot quicker than we can.”
The first companies eligible for loans under the program are the 11 that graduated from Betaspring’s 12-week mentorship program this summer.
Depending on how many of those companies accept, a large chunk of the initial $1 million federal grant could soon be accounted for, but Bennett said he envisions going back to HUD for additional grants so the loan program can be extended to future Betaspring classes and however many companies invested in by Slater fund and Cherrystone are interested.
“Certainly if we get these out with alacrity, we can go back and ask for more,” Bennett said. “I think it will take several months [to invest the money] but now that the program has gone viral, we will see.”