PROVIDENCE — Promising startups in Rhode Island may soon be able to receive an investment from the state through a newly-formed venture capital fund.
The board of directors at Rhode Island Commerce recently voted to establish the Rhode Island Venture Capital Fund and hire external firm Rogue Venture Partners to act as its manager.
Rogue Venture Partners, which is headquartered in Oregon, will start with a $2 million fund. The company will be able to make investments in early-stage and startup companies that are less than five years old and have less than $1 million in revenue.
In order to qualify for an investment, companies will have not received any — or very minimal — equity capital, including pre-seed and seed funds, and have a substantial presence in the state, according to Neil Martin, the managing director of financial programs for Rhode Island Commerce.
The maximum investment will be $250,000. Rogue Ventures must match that amount with at least equal private investment, according to Martin.
Venture capital firms typically provide financial banking for early-stage companies and startups. When a firm provides funding, a startup often gives up equity to the venture capital firm. The firm will sometimes manage the companies they invest in, or advise their founders and executives. More mature companies go public or are acquired to make money for venture capital firms and their investors.
In Rhode Island, venture capital funding is not as prominent as in other states. The Providence area, for instance, brought in $169 million in venture capital in 2023, according to PitchBook, a platform that provides private market data. By comparison, $7.67 billion of venture capital was invested in Massachusetts-headquartered companies in 2023, where biotechnology was a major driver of funding.
The lack of access to capital is also one of the biggest barriers to starting a company or sustaining one in Rhode Island, according to business leaders.
The new fund will not focus on specific industries, Commerce spokesman Matthew Touchette said. It is also expected that most, if not all, of the initial $2 million in funds will be invested by June 30, 2026, he said.
It’s not yet clear when businesses can apply for investment.
While Commerce’s board of directors voted unanimously to establish the fund, board member Donna M. Sams told Rogue Ventures co-founder and managing director Thomas Sperry that she wants regular updates on its status.
Oftentimes “you look at the data that’s out there, and these small businesses mostly stay the same size for a very long time, they aren’t getting any bigger, and yet we keep investing money,’’ said Sams, a partner and principal of both AWE and SpencerConsultingGroup, two consulting firms.
“That needs to change,’’ said Sams. “They should be getting bigger. That’s what economic development means.’’
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.
