Updates/38 Studios

We've been on the road this week a lot, so we are just getting caught up on the blog.  We'll have a few postings this weekend.

It has been an interesting week here in RI.  Lots of controversy surrounding the default of payments by 38 Studios, a company enticed into RI by the State's EDC with lots of loan guarantees and incentives.  The deal was slammed at the time as too rich (75m in guarantees on a small, 125m fund), and too heavy into a start up with no demonstrated cash flow to repay their debt.

We have mixed emotions (and will tie this into "the business side of green") on this.  We agree it was a crap shoot at the time.  The then Governor liked big deals and big PR.  This one had his signature all over it.

Yet, the intent of clustering a new industry in the State--gaming--has lots of potential.  We've already seen Hasbro invest in Providence in part because of 38 Studio, and the talent they employee, being headquartered in town.  The industry is clean, successful and helps imbue, certainly, a city with energy and youth.  It has done all of that and more in that part of Providence.

However, as you've seen with us, there are some amazing companies, full of the same potential and promise, being born in Providence.  EDC should have spread that money over 50-100 of them, specially the ones up and running and fulfilling the basic financial requirements of a viable company.  Overall, EDC's track record is good, particularly were they have offered IRB's and preferred financing to some of their most solid businesses, and in attracting great new companies like UNIFI Foods.

We hope, very much, that 38 Studios survives and, later, flourishes.  Perhaps the State can take an equity position, no different than the Feds did with GM and AIG.  Preserving their investment in 38 Studios, their employee base, their beautiful headquarters, the economic activity they've generated and the potential cluster of gaming companies they've seeded is the right choice...the only choice.  We wish them well in doing so.

Interesting, too, that our shows running right now on the TV side (and on demand on our site) are in conjunction with Grow Smart RI.  Great shows, very focused on the many positives going on in RI.  Take a look at ABC 6 on Sat at 2:30, EST, and on The Live Well Network, 1:30, EST.  Perhaps we can take a look at the 38 Studios deal, on a follow up show, and get the experts to offer their opinion on what went wrong, and how we can salvage the assets of a struggling company to put them back to work in a positive manner.

Next, we'll post the preview to this weekend's show.