Innovation economy needs committed resources

RICHARD G. HORAN is the former senior managing director at the Slater Technology Fund. He founded Biograph Venture Development LLC in March 2018. / PBN FILE PHOTO/RUPERT WHITELEY
RICHARD G. HORAN is the former senior managing director at the Slater Technology Fund. He founded Biograph Venture Development LLC in March 2018. / PBN FILE PHOTO/RUPERT WHITELEY

Richard G. Horan is senior managing director of the Slater Technology Fund, a state-backed venture capital fund charged with working with co-investors to support “entrepreneurs and technologists with the passion and vision to build high-value business in Rhode Island.”

What is your view of 2015 in Rhode Island in terms of economic health?

I would say it’s improving, but still with slow growth. Unfortunately, slower than our neighboring areas. I think the folks at Brookings [Institute] have it right: Our old industrial economy is declining faster than our innovation economy is being developed.

What do you see for 2016 in terms of Rhode Island’s economic health?

- Advertisement -

I frankly see more of the same, as we’ve seen at a macro level, with the possible exception that the innovation economy will benefit from the more activist efforts from Gov. [Gina M.] Raimondo’s administration and the support they’ve gotten from the General Assembly.

If you could, what’s one thing you would like to see happen in 2016?

The resumption of support at the state level for early-stage investment and startup companies. Our funding has declined since 2010. It had been sustained at a level of about $3 million a year through 2010 and it has since declined to a point where we are in our second year without any state-funded support. There are opportunities in the innovation economy, but we need to be there to support them.

Is there any one thing you wished could have happened here in 2015?

Yes, the groundbreaking on the proposed Wexford Science and Technology project. I would have liked to have seen that five years ago – I’d like to have seen that in 2002 when I came back to Rhode Island – because I think a focus on life sciences and biomedical is the single most-impactful investment that could be made to build our life-science enterprises [here].

How did your portfolio perform?

It’s been a busy year with an intense focus on five to seven companies in our active portfolio. By way of example, IlluminOss, in East Providence, completed a $43 million series C financing, which of course was deployed from first closing back in late 2012.

Mnemosyne Pharmaceuticals (now Luc Pharmaceutical) increased their venture funding to about $6 million, bringing the total to $12 million in aggregate funding. They announced a major deal with Novartis [International AG] and relocated to Cambridge.

Announced [in November] was the merger of CytoSolv with [Semma Therapeutics].

How about Nabsys Inc., which closed earlier this year?

If you’re looking for the most significant disappointments, you’d have to cite Nabsys, because it had been one of our most successfully performing companies. Maybe in 2016 we’ll get it back on the rails.

How is your access to capital, especially without the state’s contribution?

The state’s [contribution] is part of a three-dimensional funding formula. The [federal] Small Business Credit Initiative has been our primary source of capital for investment, and while that was on hiatus in 2014, funding resumed in early 2015. The third dimension of our funding formula is private-sector fund formation, which is engaging private investors to invest alongside Slater in a public-private partnership.

Has it become any easier to attract private investment money into Rhode Island?

It’s always a challenge, whether the capital markets are up, down or flat. The issue here in Rhode Island is our reliance on capital outside of Rhode Island. We have two highly respected equity funds, Private Equity Partners and Nautic Partners, but they do not invest in early-stage startups and neither of them are focused to Rhode Island in their investments.

Do you think Rhode Island should worry about keeping companies here?

I don’t think that should be the worry. I think it should be about building critical mass. It ties back to the assessment of Brookings. The number of committed entrepreneurs and investors is expanding and developing and it’s a matter of focusing on building that critical mass.

So entrepreneurship is growing?

Fundamentally, I’m hopeful. I do think we need to engage in some serious thought as a community about how we can take the efforts of the innovation economy to scale, so to have a meaningful impact on our overall economic development. I think there’s been a willingness to invest in the innovation economy and it’s been a sustained commitment over the years, but we haven’t yet really marshaled the resources to execute it. I think that’s the challenge. •

No posts to display