Raimondo’s Venture Fund and State Likely to Lose Millions in Nabsys Closing

Kate Nagle, GoLocalProv News Editor

Raimondo’s Venture Fund and State Likely to Lose Millions in Nabsys Closing

Governor Gina Raimondo has a tangled relationship with the closed Nabsys
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.  

According to one former top staffer, Nabsys closed because, “The board finally decided to stop the bleeding, I guess, after senior management could not close on an acquisition/merger deal,” said Valentin Dimitrov, who had been Manager of Detector Design and Evaluation at Nabsys.

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Raimondo’s Complex and Multiple Ties to Nabsys

As a venture capitalist, Gina Raimondo lead Point Judith to make two rounds of investment in Nabsys. And under Raimnodo’s direction, Point Judith was the lead in a $4 million round of investments in 2009.

According to documents filed with the US Securities and Exchange Commission (SEC), Raimondo served on the board of Nabsys as late as February of 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 has been paid nearly $1 million in fees.

Slater Funds' Top Case Success
“Importantly to me is your discovery (about Nabsys closing) is it provides extremely disturbing evidence that both the City and State pension boards and managers were blindsided here. I believe the public has the right to expect that fiduciaries of both pension funds are aware of and monitoring the investments,” said Mike Riley, financial consultant and GoLocal MINDSETTER™.

It is unclear how much the Rhode Island Pension Fund will be 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,” diclosed a Nabsys press release.

Raimondo’s bio on the Point Judith website in the later 2000’s 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.”

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 Funds Advisory Committees.  Point Judith, which was founded in Rhode Island, moved to Boston in 2012 and closed their Providence office.  In August of 2015, Point Judith filed with the SEC that it is reaising its fourth fund - this one for $100 million.

Hit to Rhode Island

Nabsys closing is a blow to Rhode Island’s startup community.  The genesis of Nabsys was a spinoff from Brown University - the genome mapping firm was heralded as a case history for the Slater Fund and employed at least 40 highly compensated technologists. Nabsys' closing is now coupled with the loss of Teespring, which moved out of Rhode Island and relocated their management in San Francisco and their production and customer service in Kentucky. Teespring’s exodus resulted in 70 layoffs in Rhode Island and the creation of nearly 400 new jobs outside of Rhode Island.

Slater Fund Investments

It is unclear how much the Rhode Island Pension Fund will be impacted by Nabsys’ closing.

It is clear that Rhode Island’s Slater Fund will take 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 lead and other rounds of capital raise

In 2009, NABsys raised $4 million in a round led by Point Judith Capital.  Shortly there after 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.

(Editor’s Note: Nabsys changed the style of their name from NABsys to Nabsys).


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