Raimondo’s Investment Lost Millions in State Funds and For Point Judith Capital
Tuesday, September 04, 2018
As a venture capitalist, Gina Raimondo was the lead investor and board member to a Rhode Island company that failed and Rhode Islanders lost nearly $1 million of investments into the company. Moreover, the state's losses could be much higher as the Rhode Island retirement fund has invested in Raimondo’s venture firm.
Raimondo’s campaign refused numerous requests for comments regarding her role in the collapse of the company and the loss of state funds.
SEE THOSE QUESTIONS AT THE BOTTOM OF ARTICLE
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn 2015, GoLocal exclusively reported that the closing of Nabsys cost the state’s Slater Fund about $1 million and may have had an impact on the Rhode Island pension fund.
Nabsys, LLC received over $40 million in total funding before it collapsed -- including millions in investments and loans from both Rhode Island’s Slater Fund and Raimondo’s venture fund Point Judith Capital in multiple rounds.
Raimondo led Point Judith to make two rounds of investment in Nabsys. And under Raimondo's direction, Point Judith was the lead in a $4 million round of investments in 2009 just as she was gearing up to run for Rhode Island General Treasurer.
Today, Raimondo is spending tens of thousands on TV ads taking her Democratic primary challenger Matt Brown for the bankruptcy of his 2006 Senate campaign.
The Raimondo campaign ad calls Brown "a failed politician who ran a near-bankrupt campaign for Senate with an apparent laundering of campaign contributions…”
Campaign Contributions -- and Taxpayer Dollars
According to documents filed with the US Securities and Exchange Commission (SEC), Raimondo served on the board of Nabsys as late as February 2010 as a result of Point Judith’s multiple investments in the company, while she was beginning her run for Rhode Island General Treasurer.
Rhode Island contracted with Point Judith to manage $5 million in state funds since 2007 and Raimondo’s former firm was paid nearly $1 million in fees.
It is unclear how much the Rhode Island pension fund was impacted by Point Judith’s hit due to Nabsys’ closing.
“In 2009, Nabsys closed a $4 million equity round and expanded its board of directors with the appointments of proven life sciences industry veterans, including Stan Rose, Ph.D., president of Rose Ventures Inc., and Gina Raimondo, Ph.D., general partner at Point Judith Capital. Point Judith Capital led the Series A round and participated in the Series B round of funding,” disclosed a Nabsys press release.
Raimondo’s bio on the Point Judith website in the later 2000s trumpeted her role and leadership in the firm’s investment in Nabsys, stating, “Gina focuses on healthcare investing, with a focus on medical device and healthcare information technology companies. She represents Point Judith on the boards of GetWellNetwork, Spirus Medical, NABsys and Novare Surgical.”
Raimondo was an active board member who tried to force the original founder of the company out. Nabsys' original founder and Brown Professor of Physics Xinsheng Sean Ling said that Raimondo tried to buy him out of the company in 2009 for an undervalued offer.
Raimondo, Point Judith, and Nabsys
When Raimondo was elected General Treasurer of Rhode Island in 2010, her partner at Point Judith David Martirano replaced her on the Board of Nabsys. Martirano also serves on one of the Slater Fund's Advisory Committees. Point Judith, which was founded in Rhode Island, moved to Boston in 2012 and closed their Providence office. In August 2015, Point Judith filed with the SEC that it was raising its fourth fund - for $100 million.
Rhode Island’s Slater Fund took a significant financial hit. According to documents provided to GoLocal from Rich Horan of Slater Fund, the Slater funding totaled $995,000 in convertible notes.
Slater receives its funding from state and federal funds and it is likely to lose most or all of its investments. The Slater funding to Nabsys totaled $995,000 in convertible notes.
“The Slater Technology Fund was created in 1997 by Governor Lincoln Almond and the Rhode Island General Assembly to stimulate the creation of new technology-based companies in Rhode Island. The Fund is financed annually by the General Assembly,” said Slater’s website in 2007.
Nabsys Inc.
• $225,000 Convertible Loan, dated June 2004, subsequently converted into Nabsys’ Series A financing in April 2009;
• $250,000 Convertible Loan, dated June 2007, subsequently converted into Nabsys’ Series A financing in April 2009; and
• $250,000 investment in Series A Preferred Stock, dated April 2009, aggregating $4 million.
Gene Spectrum Inc. (merged into Nabsys)
• $20,000 Loan, dated Aug-Oct 2000, subsequently converted into Gene Spectrum shares as part of 2007 merger with Nabsys; and
• $250,000 Loan, dated Feb-Oct 2003, subsequently converted into Gene Spectrum shares as part of 2007 merger with Nabsys.
Point Judith Led and Other Rounds of Capital
In 2009, NABsys raised $4 million in a round led by Point Judith Capital. Shortly thereafter NABsys secured $7 Million Series B Funding led by Stata Venture Partners, as announced on February 17, 2010. Other headlines on Nabsys' website include "NABsys Announces $10M Series C Round" on September 14, 2011 and "Nabsys Secures $20 Million Series D Financing to Support Launch of Semiconductor-Based Single-Molecule Platform for Genomic Analysis" on March 13, 2013.
At some point in the company's transitions Nabsys changed the style of their name from NABsys to Nabsys).
The company restarted in 2016 -- read the interview with CEO Barrett Bready HERE.
Questions to Raimondo's Campaign
On August 30, 2018, the Raimondo campaign refused to respond to the following questions.
Your campaign has taken Matt Brown to task for the bankruptcy of his campaign in 2006.
As you may know, GoLocal broke a series of stories in 2015 regarding the NABSYS -- a company which went into receivership, laid off all the workers, and closed the doors without notice.
PJC partner Raimondo had been a lead investor in the company and served on the board.
Moreover, as reported she tried to force the original scientist and Brown faculty member out of the company.
In addition, the state of Rhode Island lost its investment made by the Slater Fund.
How is this different from the charges you have levied against Brown?
Isn't it worse as Rhode Island taxpayers lost their investment, please address?
Related Articles
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- INFOGRAPHIC: DNA of Nabsys Financial and Political Relationships
- EXCLUSIVE: Barrett Bready Buys Defunct Nabsys for Pennies on the Dollar
- EXCLUSIVE: Nabsys Founder Forced Out by Bready, Raimondo for Raising Concerns UPDATED
- Nabsys – Back from the Dead Under Bready’s Return
