Slater, Cherrystone invest in North Smithfield startup

Rhode Island investment groups are pumping dollars into North Smithfield-based Ion Signature Technology Inc., underwriting the state’s reputation as a haven for young technology companies.

Cherrystone Angel Group, a syndicate of private investors headquartered in Providence, has put up $310,000 toward IST’s future in the state.

The Slater Technology Fund simultaneously has invested $150,000 in the small tech firm, which received an initial $75,000 in capital from the state-financed fund last October. It was Slater’s first investment that drew IST to the state from Cambridge, Mass., last year. “We found doors open up in Rhode Island,” said John C. Moore, president and CEO of IST. “It was a night-and-day situation when I compared Rhode Island to Massachusetts.”

A dime a dozen in the Bay State, IST has found sanctuary in Rhode Island where public and private interests are ponying up to redefine the smallest state as an incubator of innovation.

“It’s very obvious,” Moore said, “people in the state want to see IST grow and create jobs in Rhode Island.”

Ion Signature Technology sells equipment and software engineered to quickly identify and quantify chemical compounds in test samples. Albert Robbat Jr., a professor of chemistry at Tufts University, developed the technology and founded IST in 1996.

Moore said he intends to use the new capital from Cherrystone and Slater primarily to boost sales and marketing efforts. He plans to hire three to four people to work in sales support and product development.

The company now has seven independent salespeople who market its software, Moore added.

Kenneth N. Kermes, a member of Cherrystone, will serve on IST’s board of directors in return for the group’s investment.

Ronald Unterman, managing director of the Slater Technology Fund, has been a non-voting member on IST’s board since September 2004.

Other than Cherrystone’s and Slater’s seats on the board, the parties declined to detail each group’s stake in the privately held company.

Yet all lauded the deal as a boon for the state’s economy.

“(Slater) invests in early-stage companies because we see them as the growth engine for Rhode Island’s economy,” Unterman said. “If you look at the job growth in the United States as a whole, small companies with less than 100 employees represent” almost all of it.

Unterman noted that small technology companies, in particular, bring high-paying jobs to the state. The jobs help the state retain graduates from local colleges and universities who otherwise would seek employment elsewhere, he added.

Slater’s investment in IST fits within its philosophy of bringing the state’s young technology companies to the next level. In fact, the fund puts up $3 million annually to help ensure that startups prosper in the state, according to the group’s Web site.

The IST investment is Cherrystone’s second since forming early last year. In March 2004, the group provided $225,000 in capital to Newport’s Advanced Image Enhancement Inc., which develops software to enhance the clarity of mammograms.

Each of Cherrystone’s 40 members has the option to participate in its investments, Kermes explained, and about 25 members contributed to the IST venture.

According to Cherrystone’s Web site, the group aims to invest $100,000 to $500,000 to assist startup companies to achieve growth preferably in Rhode Island or at a location within a two-hour drive of Providence.