Carrying the torch of innovation for Rhode Island is an organization that searches for and detects innovative leadership, creativity and vision in individuals and companies.
The Slater Technology Fund, the state-backed, seed-stage investor, has a decade-long history of investing in innovative businesses, but in the last two years, it has made a point of focusing its resources on the best and brightest people with cutting-edge, life-altering technologies.
Since 2006, despite its skeleton staff and tightening budgets, Slater has invested in startups making amazing technological strides, including developing robotic surgical devices, inhibitors for the treatment of sepsis, and personal communication systems for the hearing impaired, to name a few.
It is that kind of support that earned the Slater Technology Fund its award as Innovation Champion this year.
Richard G. Horan, senior managing partner of Slater, said like anything in life, the most important element of a venture’s success is its people. Slater finds innovative people from various backgrounds, including scientists, students and serial entrepreneurs, and invests in them.
Slater-backed entrepreneurs are guys and gals who have vision, leadership and commitment but typically are starting new ventures with few resources, according to Horan.
When it is not an individual, it is market opportunity that Slater seizes. The fund has focused on specific sectors, especially life sciences, investing in several segments, including neuroscience and developments stemming from the mapping of the human genome.
“It has become an area with ripe opportunity for startups, and a few companies have emerged in the area, most notably Cyberkinetics Neurotechnology Systems Inc., Afferent Corp., NABsys and GeneSpectrum,” Horan said, listing companies in which Slater has invested.
“It is frankly difficult, if not impossible, to stay abreast of innovation,” Horan said. “On the other hand, what we try to do, through a network of ourselves and a board of directors and through members of sector advisory boards and through networks of relationships developed in this community in Rhode Island and the region, is to draw upon their knowledge.”
Slater in recent years has succeeded at making great investments, but that has been possible only through careful consideration. Slater considers several criteria, including the people; technology and market opportunity; quality of business plan and model; feasibility of financing venture; and commitment to build the business in Rhode Island.
There has been a noticeable change in what Slater is today from what it was in years past. The number of companies seeking funding was greater and the quality in some cases may have been questionable, according to Horan.
“As the Slater program has developed its experience, refined its focus and strategy, things have evolved,” Horan said. “Slater has been in business for 10 years, and there has been an improvement in the quality and quantity of opportunities that have come our way.”
In the fiscal year ending last June 30, Slater completed or approved $3.1 million in funding to 11 technology ventures and gained $930,000 in the form of returns on investments, more than double last year’s return and the strongest gain in the fund’s history. In the previous year Slater invested $3.5 million in 10 companies.
These numbers are a direct result of Slater’s new focus of supporting its investments.
By structuring Slater’s investments in the form of equity-related securities, the fund hopes to achieve returns on investment that will in the long-term enable it to be self-sustaining.
To foster innovation, Slater directors collaborate with people at Brown University, the University of Rhode Island, and Rhode Island School of Design, while tapping financial experts from Velocity Equity Partners, Mellon Financial and IDG Ventures to provide sound investment and business advice.
Slater also provides incubator space, and sponsors events such as Slater Interactions.
The fund sees itself as just one piece in the overall innovation economy taking place in the state.
“Innovation is a broad topic and it embodies itself in many different ways,” Horan said. “There are numerous organizations, initiatives and programs that are focusing on innovation, and it’s not by chance.”
Horan credits the R.I. Economic Development Corporation and more specifically its director, Saul Kaplan, for articulating a strategy for an innovation economy and galvanizing the community around that theme.
“It’s beginning to come into a rather cohesive picture in terms of financing mechanisms to aspiring entrepreneurs,” Horan said of the various statewide efforts.
So what’s next?
Slater needs to be taken to the next level, Horan said, and in order to do that, the plan is to balance public support from the state with private-sector involvement.
“We look primarily to private-sector engagements, whether through partnering and investments,” he said. “We are gratified to have the continued support from the governor but are realistic with the prospects of getting funding from the private sector.”
To stay the course, Slater has concentrated on larger-dollar investments with a smaller number of investees in every given year, keeping one goal in mind: to build substantial business enterprises in the state of Rhode Island and attract world-class people. •
