Within the last few weeks, a $2 million infusion of U.S. Treasury Department cash in Providence startup-accelerator Betaspring from two years ago has become a hot topic for discussion.
The State Small Business Credit Initiative was designed to get capital to small companies, and Rhode Island was scheduled to receive $13.1 million. But so far, only about one-third of the money has come through, and the lion’s share has gone to Betaspring.
The delay is the result in large part of a private audit and now a federal investigation into that decision by the state. Many of the questions being asked turn on interpretation of accounting principles and legalistic readings of the authorizing legislation and the state’s application to take part in it. At this point, all Rhode Island can do is wait for the results.
But the public sector needn’t wait to consider whether the choices made at the time were given a proper open discussion.
With hindsight that is decidedly blurry, it is difficult to recall any dialog on whether it made sense for the state to be taking federal money and using it to help cover the costs of the accelerator program for all participants and receiving stakes in the graduating startups in return. Would it have made more sense to have Betaspring’s private investors take the risk and then give select graduating companies a capital boost, thus taking a stab at mitigating the public sector’s risk? No doubt, even more relevant questions could have been asked.
We don’t now know, nor will we know anytime soon, which path should have been taken. But these sorts of conversations should have been had in public. •
