Startups leave RI for Mass., Silicon Valley in response to lack of funding

Local entrepreneurs think RI unfriendly for startups, cite lack of a strong capital investment network and taxation disparity with neighbors

As companies like TAZZ Networks look for funding out of state and companies like Cyberkinetics leave for Massachusetts, local entrepreneurs call for increased local-based capital.

Besides more sources of capital, Massachusetts has been especially attractive for startups due to a large talent pool of highly skilled people as well as lower personal income taxes.

Among the groups that provide early-stage company capital are the Slater Fund, Cherrystone Angel Group, and Point Judith Capital. However, the latter two do not limit their investments to the RI area.

Despite recent examples of startups leaving the state, there are success stories as well. One is Ion Signature Technologies Inc., which CEO John C. Moore said moved from Cambridge, Mass., to North Smithfield last year to receive startup capital from the Slater Fund.

IST isn’t the only startup that has found advantages to basing operations in Rhode Island. Take Afferent Corp., a Providence developer of medical devices to treat chronic neurological problems, which enjoys a higher profile as well as easier access to business and political leaders in Rhode Island, because there are fewer companies in its sector here than in Boston, said Jason D. Harry, Afferent’s CEO.

Full Story: R.I. venture capital: talent vs. funding Source: Providence Business News, November 26th, 2005