Monday, March 3, 2008

R.I. teams with lenders to grow high-wage tech jobs

By Brendan Lynch

Ocean State startups and growing companies may soon find it easier to find financing, following a pair of deals struck by the Rhode Island Economic Development Corp.

The moves are part of a larger 10-year plan to increase the percentage of Rhode Island jobs that pay above the national average to 60 percent, from the 40 percent it is now, according to RIEDC executive director Saul Kaplan.

"We're trying to create a 21st century innovation economy and higher-wage jobs," he said.

RIEDC struck up a partnership with the Business Development Co. of New England (BDCNE), which has raised a $30 million mezzanine fund called MB Capital III that will be used to invest in growing Rhode Island companies. The group, owned by a consortium of banks and insurance companies, began expanding into Rhode Island two years ago. With RIEDC's help, it has already invested $6 million in Ocean State companies, according to CEO Ken Smith, who declined to name the companies that received funding.

"We're hoping to tap into their outreach efforts to deliver capital to companies," Smith said.

Wakefield, Mass.-based BDCNE has also hired an investment officer who will work out of the RIEDC offices a few days a week, Smith said.

In 2005, the Connecticut Business and Industry Association struck up a similar partnership with the BDCNE to provide capital to Connecticut companies. That partnership differed in that it didn't operate under a state business development plan and was offered to the CBIA's membership.

"The end result is as many growing companies as we can find that we can get in front of," Smith said.

The RIEDC partnership also includes the unrelated Business Development Co. of Rhode Island, which will work with the RIEDC to help companies seeking less than $500,000 in financing, Smith said.

Secondly, an RIEDC-backed bill is set to be introduced into the Rhode Island Legislature to reposition a $20 million guarantee authority originally used for industrial companies needing machinery. The guarantee authority is intended to help companies obtain loans from private lenders for patents, software, trademarks, copyrights and licenses, according to the RIEDC.