By Ted Nesi
PBN Web Editor
The Slater Technology Fund scored a coup in 2007 when it used a $500,000 investment to get Cardiorobotics Inc., a promising medical-device startup, to relocate to Middletown from Pittsburgh, where it was founded.
So when Cardiorobotics announced last month that it planned to add a third office and double its staff to nearly 30, it should have been good news for the state-funded venture capital firm, which invests in early-stage biomedical and technology companies but saw its state funding cut by one-third this year.
The only problem: Cardiorobotics said the new office would be across the border, in Raynham.
That disappointed Richard G. Horan, Slater’s senior managing director. “As a general matter, Slater invests in new ventures based upon a demonstrated commitment to build the business in Rhode Island,” he said. “That’s a very important priority for Slater.”
The past year was challenging for the Slater Fund, which makes six to 10 investments annually. Its annual state appropriation was cut 33 percent to $2 million, while the returns from its investments dropped 80 percent. And even when one of its bets paid off, a neighboring state was the beneficiary.
Horan’s disappointment over Cardiorobotics’ decision to expand into Massachusetts highlights how Slater differs from a regular venture capital firm. Unlike its private sector peers, Slater has other goals, such as creating high-value jobs in Rhode Island and helping the state build a knowledge economy, apart from securing a return on capital.
Slater has received $37.2 million from the state since its founding in 1997, according to the House Fiscal Office. That money has been used to invest about $20 million in 100 companies, which at their various peaks employed a combined 862 workers. Horan says about 495 of those jobs still exist.
One of the reasons Cardiorobotics’ Massachusetts decision was frustrating for Slater was because the firm is one of just four in which Slater has invested $750,000, the most it has ever given.
Dr. Samuel F. Straface, Cardiorobotics’ CEO, said his team chose the Raynham facility because it was relatively inexpensive to lease and already outfitted with the infrastructure the company needed. In addition, two subsidiaries of health care giant Johnson & Johnson are based in Raynham, and Covidien Plc and Boston Scientific Corp. are nearby, too.