A DISAGREEMENT between Slater Technology Fund and the R.I. Economic Development Corporation is jeopardizing the public venture capital firm’s use of up to $9 million in federal funds it hopes to invest in Rhode Island companies.
PROVIDENCE – A disagreement between Slater Technology Fund and the R.I. Economic Development Corporation is jeopardizing the public venture capital firm’s use of up to $9 million in federal funds it hopes to invest in Rhode Island companies.
In an emergency meeting late last month, the Board of Directors of the state Small Business Loan Fund Corporation, which is controlled by the EDC, voted to take over $1.2 million that had been allocated to Slater as the first installment of a $9 million federal award.
In minutes of the Nov. 29 meeting, SBLFC Board members blame objections from Slater to reporting requirements attached to the federal funds for the failure to reach an agreement freeing the money.
“The Resolution with Slater at this time is incomplete as there was some objection on Slater’s behalf regarding the reporting requirements attached to the funding,” loan fund Managing Director of Finance Earl Queenan told the Board, according to the minutes.
“Mr. Queenan felt that since it is required that 80 percent of this $4.3 million (tranche) be out and committed to actual projects prior to requesting the second tranche, this would be the best way to start the process, rather than waiting until a final agreement is made with Slater,” the minutes continued.
But Slater Senior Managing Director Richard Horan Friday rejected the notion that his fund had resisted complying with any reporting requirements for the federal money, adding that fund leaders have been willing to work out a deal with the EDC since the money was awarded.
“It is not true that Slater objects to the reporting requirements of the [State Small Business Credit Initiative], and no such objection has been conveyed by Slater,” Horan said in a Friday email. “Further, we have been prepared since the deal was announced back in September to sit down and work out the terms of a deal as expeditiously as possible.”
In a phone conversation Horan declined to discuss what issues are in fact at the center of the dispute with the EDC, citing ongoing negotiations between the two sides that he hopes will allow Slater to eventually use all of the federal dollars originally allocated to it.
The $9 million award to Slater, part of the U.S. Treasury Department’s State Small Business Credit Initiative, was the largest portion of a $13.1 million grant to Rhode Island.
Business accelerator BetaSpring was awarded $1.4 million of the initial funding round and the SBLF $2.7 million, including the $1.2 million originally allocated to Slater. When the initial announcement of the $13.1 million federal grant was made, BetaSpring was expected to receive $2 million in total and the SBLF $2.1 million.
Reached by phone Friday, EDC Executive Director Keith W. Stokes Friday declined to discuss any aspect of the negotiations with Slater, citing ongoing negotiations, but promised that “we will deploy this $13.1 million.”
Stokes said EDC officials hoped to meet with Slater next week.
The disagreement comes at an inopportune time for Slater, which had hopes to use the federal money to wean itself from state aid, which totaled $2 million in 2011.
In his email Horan added that Slater does have “pressing needs for capital to invest in support of the entrepreneurs and investors whom we serve.”
“There happens to be a particularly compelling pipeline of startup companies at the present time with whom we have been actively working over the last 6-12 months to provide critically-needed equity capital,” Horan said. “The SSBCI Program is ideally-suited to supporting such companies, so we’re hopeful that we can be in position to capitalize on these opportunities as soon as possible.”