Governor Martin O’Malley on Thursday signed legislation intended to foster Maryland’s cybersecurity industry through a new Cybersecurity Investment Incentive Tax Credit. The governor also signed legislation that modifies the state’s InvestMaryland program to make it easier to negotiate with venture capital firms. The bills represent major priorities of the Maryland Department of Business & Economic Development.
Funded at $3 million, the Cybersecurity Investment Incentive Tax Credit provides a refundable tax credit to qualified Maryland cybersecurity companies that seek and secure capital from an in-state or out-of-state investor.
“The passage of the bill is very exciting. It’s going to reinforce the dynamic nature of what’s happening in this industry. We started out largely with government-driven activity in cybersecurity. Now we have a lot of new companies that are developing cybersecurity products for both federal government and government in general, as well as banks, utilities and retailers. And yet, venture capital investors don’t really know much about what’s happening in this community. This is really a way of increasing our profile with those investors, and that’s going to be one of the biggest benefits with this tax credit,” said Ursula S. Powidzki, Maryland DBED Assistant Secretary of Business & Enterprise Development.
Maryland DBED Secretary Dominick Murray said the legislation complements the industry’s comparative advantage in Maryland.
“Cybersecurity is one of our strengths and you always capitalize on your strengths. We have that critical mass here, including one of the most highly educated workforces, especially in math and science. We’ve got the land, air and sea covered, but now there’s this extra domain on the Internet, and Maryland will be able to participate in protecting our nation and our state,” Murray said.
The tax credit also specifically encourages out-of-state investors to contribute to Maryland cybersecurity companies. ”We don’t have all the capital here in the state of Maryland, so we’re encouraging worldwide investment,” he added.
The governor also signed into law changes to Maryland DBED’s InvestMaryland Program Initiative.
“We want to make it easy to invest in venture funds that will in turn partner and invest our money in Maryland companies,” Murray said.
Since 2012, select Maryland companies and venture capital firms have benefitted from the program, funded by $84 million raised by the state’s first online auction of premium insurance tax credits. Legislators approved adjustments to the program during the 2013 session to ensure proper authorization of investments and allow for easier negotiations with participating venture capital firms.