NABsys and the Investment of Public Dollars

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Kate Nagle reports on GoLocalProv about another public investment gone wrong:

The closing of Nabsys, first reported by GoLocalProv, is likely to cost the state’s Slater Fund about $1 million and may have an impact on the Rhode Island pension fund.

Nabsys, LLC received over $40 million —  including millions in investment and loans from both Rhode Island’s Slater Fund and Governor Gina Raimondo’s venture fund Point Judith in multiple rounds.  Nabsys closed after it failed to find a merger partner or acquirer say sources.

Businesses open and close.  That’s how the marketplace works.  If Raimondo’s private investment firm wants to take the risk of investing, so be it.  NABsys’s connection through Raimondo to the pension fund or the Slater Fund merits a closer look, but doesn’t appear to be nailed down, quite yet.

One question that comes to mind, nonetheless:  Would it really be a “success” if a company backed by some investment through a publicly funded fund managed to merge itself out of existence or find an acquirer?  I’m sure financial wizards would be able to explain how this all benefits the state, but most Rhode Islanders, it’s fair to say, see public investment in economic development and technology as intended to grow the economy and create jobs.

Of course, if the founders of a private company can make a big profit through a merger or acquisition, their financial backers will profit, too, which can be a wonderful thing, but these sorts of money-making ventures shouldn’t be an activity of government.



  • Winter Solstice

    VC investments, like other alternative investments are risky, volatile and opaque which makes them inappropriate choices for already underfunded public pensions.

  • Mike

    I was just reading up on this story. ConvergenceRI has a good article on it:

    http://convergenceri.com/stories/The-story-behind-the-unraveling-demise-of-Nabsys,1793

    I found this part intersting on how government’s involvement in creting business creates conflicts of interest:

    “Raimondo might now find herself in a vulnerable position, open to questions, given the close relationship she had with Nabsys and its founder, Dr. Barrett Bready.

    Nabsys, a company in which Raimondo’s Point Judith Capital firm had invested, was featured in a campaign ad for Raimondo touting her job creation skills during her successful 2014 campaign, which included interior shots of Raimondo visiting the company.

    In January of this year, one week after Raimondo’s inauguration, Bready, in turn, hosted a $1,000-a-person fundraiser for Raimondo at his East Side residence.

    And Bready was the only member of the commission responsible for future development of the former Route 195 land who was reappointed by Raimondo.

    Bready’s current role on the commission, particularly in deciding on potential future investments, such as the proposed Wexford life sciences development that abuts the Nabsys building, could raise issues regarding conflict of interest.”

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