‘We haven’t touched the line of credit yet because we had an equity infusion’
SUCCESS STORY: NuLabel Technologies' leadership team, from left: President Max Winograd, Vice President of Engineering Michael Woods and Chief Technology Officer Ben Lux, has received loan guarantees from the state, but unlike 38 Studios, the tech startup has attracted outside investment as well.
The $1.5 million loan Rhode Island guaranteed for NuLabel Technologies Inc. of Providence last August bears little resemblance to the $75 million taxpayer-backed financing package delivered out of the same program to Curt Schilling’s 38 Studios LLC a year earlier.
The results couldn’t be much more different either.
Where Schilling’s video game company has spent the entire $49.5 million in cash provided by the loan and is now looking for up to $14 million in state film-tax credits to avoid collapse, NuLabel hasn’t spent a penny of its loan because of the private capital it raised.
“We are doing awesome,” said NuLabel President Max Winograd. “We haven’t touched the line of credit yet because we had an equity infusion that we can run on.”
NuLabel’s story is similar to what’s taking place in North Kingstown, where The Corporate Marketplace Inc., which runs corporate-incentive programs, has drawn down only $1 million of the $4 million state-guaranteed loan approved last October.
“We are going gangbusters,” said Corporate Marketplace CEO Chris Crawford. “We continue to grow at 40 percent month over month and are now profitable.”
As PBN was going to press last week, various media outlets were reporting that 38 Studios had laid off its entire staff of nearly 400. In a press conference May 24, Gov. Lincoln D. Chafee said that the state had been unable to confirm the layoffs, but had offered assistance of a R.I. Department of Labor and Training response team to the company.
“It is not a good situation,” Chafee said.
The prospect of a 38 Studios collapse, which would leave Rhode Island taxpayers on the hook for more than $100 million in principal and interest payments (less $23 million held in reserve) has raised questions about the future of the state’s $125 million Job Creation Guaranty Program.
Counting the guarantees already made, the state currently has $44.5 million worth of guarantee capacity to invest in new companies looking to grow in Rhode Island.
In October, when the EDC approved the loan guarantee for The Corporate Market Place, EDC Director of Financial Programs Earl Queenan said 14 companies who had applied for financing were “in the pipeline” of vetting and review.
Then-EDC Executive Director Keith W. Stokes, who has since resigned amid criticism of his part in the 38 Studios deal, said the quasi-state agency was anxious to put that capital to work for the economy.