Business
Local Chamber to scour region for investors
01:00 AM EDT on Friday, March 21, 2008
PROVIDENCE — For start-ups, the streets are not paved with gold in Rhode Island, and the scarcity of investors has led to persistent complaining among those with bright ideas but empty pockets.
The taxpayer-backed Slater Technology Fund has tried to fill that void, but its $3-million annual budget leaves most firms still short of capital.
To remedy that, state economic-development officials have long sought to lure venture capitalists. Now, the Greater Providence Chamber of Commerce is pitching a different strategy — go where the money is.
Later this month, the Chamber will host the first in a series of workshops to help entrepreneurs seek out investors throughout the region.
The six-month course will be led by Jack Derby, founder of the Derby Management consulting firm in Boston and an adjunct professor at Tufts University.
“We have been doing this for a while and we know a lot of the venture guys,” Derby said. “They’re probably not going to come in and set up an office in Providence.”
There are more than 200 venture-capital firms near Cambridge, Mass., the epicenter of a powerful technology cluster. However, although only an hour’s ride away, most are so inundated with proposals that they have little need to scour Rhode Island in search of investment opportunities, Derby said.
The Entrepreneur Launch Pad program is designed to help local companies grab the attention of those and other investors.
Laurie White, the Chamber president, said she conceived the Launch Pad after attending a course Derby taught at the Massachusetts Institute of Technology in October and later meeting with him in Boston.
“This is an opportunity for Rhode Island entrepreneurs to talk to fellow entrepreneurs and to listen to successful experts from the world of business strategy and venture capital,” White said in a statement.
The eight sessions will cover a broad range of topics, including how to write a business plan, increase a sales force, protect intellectual property, hone a pitch and negotiate a term sheet with an investor.
The inaugural session will be held May 28. If the program is successful, the Chamber plans to repeat it annually.
This is not the first effort in Rhode Island to give young companies a financial lifeline.
The Small Business Development Center at Johnson & Wales University has long offered courses for entrepreneurs. Recently, the state Economic Development Corporation persuaded The Business Development Company of New England to take a closer look at Rhode Island firms, a partnership that state officials predict will bring in tens of millions dollars in growth capital.
Last year, the EDC began doling out tax credits to reward investors who bet on local businesses.
For its program, the Chamber is investing $35,000, its second major initiative this year aimed at boosting sluggish job growth in the capital city.
In January, the chamber announced a study by a Washington, D.C., consulting firm to study Providence’s business climate and recommend ways to retain college graduates, spur collaborations among businesses, hospitals and universities and strengthen start-up companies. The study’s findings are not expected until next month, but White said survey respondents have identified venture capital as a key deficiency.
To participate in the Launch Pad, companies must demonstrate their potential through an application and, if accepted, pay a fee for each course. The first session, for example, costs $575 for non-Chamber members and $300 for members.
Derby said that investment could buy them invaluable business skills as well as contacts that could provide critical investments in their fledgling enterprises.
“It’s not a little seminar with cookies and tea. It’s an education,” said Derby, who invests in young companies through his consulting firm and as a member of the giant venture-capital firm CommonAngels. “They may get a meeting out of it.”
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