121nexus used its $50,000 Providence Innovation Investment Program loan to hire its first employee and four interns to develop a mobile voter-data system in time for the 2012 presidential election.
Splitwise used its city loan to pay rent, hire an employee and keep improving its mobile check-splitting application until the company’s first round of private financing kicked in. “It came at a really important time for Splitwise, months before we were going to be able to close any private investment,” said CEO Jon Bittner about the Providence investment. “In our case it also helped give other investors – friends, family, angels – more confidence in us, because they realized they were investing with the city.”
Splitwise and 121nexus were among 33 companies – including most graduates of the last two classes of the Betaspring startup accelerator – to take advantage of the federally funded city loans offered to select entrepreneurs who agreed to stay at least one year in Rhode Island’s capital.
They could also be among the last.
The city suspended the loan program, a victim of its own success, late last month after it had burned through $650,000 more than the $1 million set aside when it was launched in the fall of 2011.
Although $50,000 loans don’t sound significant in economic-development terms, they’ve played a big part in the rapid growth of Betaspring and the startup hub thriving at its Chestnut Street headquarters.
With cities and startup accelerators across the country competing to attract entrepreneurial talent, the city money gave Betaspring a major edge it’s now scrambling to replace.
And as a public investment in the technology sector, the Innovation Investment loans represented a stark strategic alternative to job-creation incentives for large companies, such as the 38 Studios LLC investment, that are often a feature of state economic-development efforts.
“I think it is important not to underestimate the [significance] of $50,000 for startups companies: it is a bridge fund that lets them settle in Providence,” said Melissa Withers, Betaspring chief of staff.