Slater Centers approve merger, job cuts, fund changes

Amid shake-up, state officials tout ‘streamlined’ operation, more investments and reduced costs
The development fund that has used $11.3 million for 90 entrepreneurial ventures in Rhode Island since 1997 is streamlining its operations.

The board of directors of the Slater Board voted unanimously to merge the four existing Slater Centers – for biomedical technology, design and manufacturing, interactive technologies and environmental technologies – and the executive arm into a single organization, the “Slater Technology Fund Inc.”

“We want a streamlined, flexible and focused organization,” said Michael McMahon, executive director of the Rhode Island Economic Development Corporation and chairman of the Slater Board’s board of directors.

In addition to streamlining operations, the move could save the fund 15 percent of the General Assembly’s annual allocation by reducing operating costs. The number of staff needed to administer the fund will be reduced, including the elimination of executive director of the Slater Technology Fund Jerry Schaufeld’s job.

“I believe this is absolutely the right move,” Schaufeld said. “The infrastructure was working, but the decision-making process was too cumbersome to move to the next level.”

A three-person subcommittee was charged in September 2004 with reviewing the structure of the fund.

Under the old model, the annual funding from the state’s General Assembly – cut 25 percent from 2004 – was automatically divvied up among the four independent centers – the Slater Center for Biomedical Technology, the Slater Center for Interactive Technologies, the Slater Center for Design and Manufacturing and the Slater Center for Marine and Environmental Technologies – and then distributed to companies selected by the centers’ own boards.

“Slater wasn’t changing with everyone else,” Schaufeld said, “so Slater needs to change too.”

Schaufeld said he will stay on with Slater in a consultant role for at least six months after the change is implemented on March 31.

The committee also recommended the board establish an investment committee, which would approve each investment the Slater Fund makes.

The fund will remain focused on the four original investment areas, with advisory boards representing each sector under the new model.

Jeff Seemann, dean of the College of Environment and Life Sciences at the University of Rhode Island and a member of the subcommittee, said the change was needed to keep Slater on pace with the types of businesses it funds.

“The world of high-tech is one of the fastest-paced areas, and this organization is here to fund high-tech development,” Seemann said.

And having one place to go for state-sponsored entrepreneurial investing means more companies could be able to open.

“This (new model) is the best use of funds,” Seemann said. “Fifteen percent of the annual appropriation could go from operating to actual investing – the equivalent of three companies a year.”

Cynthia Reed, president and CEO of LTR Holdings and a member of the subcommittee, said the change will allow Slater to maximize the direct investment of state funds. Consolidating the centers into one organization also reduces operational costs by eliminating the duplication of functions.

Seemann, Reed and Neil Steinberg, vice president for development and campaign director at Brown University and the third subcommittee member, said they took considerable time examining the fund and its structure.

A recommendation from the subcommittee was due in November. The delay stemmed from a desire to be thorough, members of the subcommittee said.

“We committed a tremendous amount of time and study to this” to allow all people involved to be heard, Seemann said.

McMahon said the decision to merge the four centers and the executive board results in three beneficial factors. “There’s more money to invest in companies, there’s a better process and it gives the fund a platform to try” and attain private funding, McMahon said.

In addition to improved cash flow, restructuring the fund allows Slater more flexibility to adapt to economic and market shifts, keep up with technology advances in the state and align with the Ocean State’s overall economic development and job creation goals.

The committee also recommended establishing long-term funding for the fund by creating a public-private partnership. And to keep Slater as a leader in creating jobs, the committee also suggested annual sector revaluations.

The fund was created in 1997 as an annual legislative grant aimed at nurturing young startup companies in Rhode Island.