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The next great idea was easier to find than a necktie at TechBuzz2014, a semi-annual event put on by the Mid-Atlantic Venture Association (MAVA) where entrepreneurs, given more to flannel shirts than business suits, pitched their fledgling companies to an auditorium full of venture capital and angel investors.

The event aimed to link investment firms with 20 promising startups seeking about $1 million to $3 million to expand their businesses, hire talent and begin building their products.

Dozens of startups have presented at six similar TechBuzz gatherings since 2010 and 40 percent received venture funding within a year as a result, said MAVA Executive Director Julia Spicer. The growth of TechBuzz over the past four years reflects growth of early and venture-stage investing in the mid-Atlantic. The Baltimore-Washington region is among the most active areas for venture investing in the country, along with California, Massachusetts, New York and Texas.

Venture capital funding in Maryland increased to $663 million in 2013 from $408 million in 2012, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association. The state’s 63 percent growth far outpaced the national average of 7 percent. Maryland is also establishing itself as a major market for early investment, according to a report by the State Science & Technology Institute (SSTI) last month.

That was evident Tuesday at the Bethesda Blues & Jazz Club, a newly renovated Art Deco-era moviehouse, where startups, some of whom who just sold their first product weeks ago, came in search of early “angel” or “Series A” investment. The Maryland Department of Business and Economic Development (DBED) was a co-sponsor of the event. James Keeratisakdawong, Principal with DBED’s Maryland Venture Fund (MVF), co-chaired the committee that reviewed the applicants and selected 20 companies to present.

The startups spanned a wide array of ideas and products, some targeting consumers, others geared to the enterprise market. Companies ranged from Basepair, developer of software to analyze DNA sequencing data, to Brain Sentry, a Bethesda company whose wearable helmet sensors can signal when a youngster in a contact sport needs to be checked for a possible concussion, to LoveThatFit, a “virtual fitting” technology that enables users to try on clothes “virtually” and that aims to improve online apparel shopping. Armed only with slide presentations and “elevator speeches,” the entrepreneurs had four minutes to make a pitch. A countdown clock ensured not a second more. A panel of judges then evaluated them in the venture capital equivalent of “American Idol.”

One judge, MVF Managing Director Thomas S. Dann, observed that many local startups are focused on the hot markets of cybersecurity and cloud computing. But whatever the venture, he said, “we want to see entrepreneurs focused on the problem that the customer is trying to solve and how the ROI [return on investment] they offer can attract that next customer.”

Passion was also important. The judges said they made special note of whether the entrepreneur was motivated by a “pain point” they had experienced while seeking a product or service. One example of that was Mark Olcott, who described his College Park-based company Vitus Vet as a cloud-based network of medical records for pets. He described an example of a dog named Bogey that was brought to an emergency clinic for treatment after being injured. The pet died later that night because it couldn’t tolerate the type of anesthesia administered.

Olcott revealed he was the vet.

“I felt like I got kicked in the stomach,” he said.

Startups also must not overlook the potential competition for what they’re trying to create, said Dayna Grayson, a Partner at New Enterprise Associates, which ranked sixth last year for investments in Maryland, according to a recent Baltimore Business Journal survey. “A lot of presenters today didn’t talk about competitors,” she said. “Many large public companies have few direct competitors. It’s not enough to say you’re going to be among the best of five or six.”

Ultimately, as one investor judge told the entrepreneurs, the proof is in the product: “You get enough customers,” he remarked, “then you don’t need our money.”

BALTIMORE, MD (March 25, 2014) – The Maryland Department of Business and Economic Development (DBED) announced today that 12 startup companies have advanced to the final round of the InvestMaryland Challenge, the State’s national business competition. The finalists are competing for $100,000 top prizes in four categories — Information Technology, Life Sciences, General Industry, and, new this year, Cybersecurity. All companies who entered the Challenge are eligible for more than $300,000 in other prizes, including grants, software and lab and incubator space. The winners will be announced in May.

“Congratulations to the finalists and all the companies that advanced in the InvestMaryland Challenge. To stand out from the field of 260 applicants is an achievement in itself and a testament to the strength of the companies competing for the top prizes,” said Dominick Murray, DBED Secretary. “For two years in a row, Maryland has been named the #1 state in the country for innovation and entrepreneurship and companies like those competing in this Challenge are the reason why. They are the future leaders of Maryland’s Innovation Economy and we are proud to support them as they grow and create jobs.”

Now in its second year, the InvestMaryland Challenge drew 260 applicants, including 29 companies from 11 other states and Washington D.C. The field was narrowed over two rounds of judging by more than 80 investors, successful entrepreneurs, business executives and other members of the Maryland startup community. In early March, panels of judges interviewed 41 semifinalists — 14 in IT, 10 in Life Sciences, 11 in General Industry and six in Cybersecurity — and selected the 12 finalists from that pool. IT, Life Sciences and Cybersecurity were open to only Maryland companies. The General category was open to out-of-state companies as well as Maryland companies.

IT Finalists: Continue Reading…

Recent changes to loan programs through the U.S. Small Business Administration are easing the financing process for Maryland entrepreneurs, and winning approval from State business leaders.

The SBA is now waiving the upfront guaranty fee and ongoing fee on category 7(a) business loans of $150,000 or less. Potentially, a small business owner obtaining a $150,000 loan could save more than $2,500 in fees. The waiver became effective on Oct. 1, 2013 and continues through Set. 30, 2014. Participating banks will continue to receive an 85 percent guaranty on 7(a) business loans. The backing of the SBA lowers the loan’s risk and acts as an incentive for participating banks to loan funds to qualifying business owners, according to the SBA.

Category 7(a) business loans are the most popular SBA loans issued by participating banks in Central Maryland, which is served by the SBA’s Baltimore District Office. In fiscal year 2013, participating banks issued 432 7(a) business loans, representing over $166 million, out of 510 total business loans with a total economic impact of over $272 million, according to the Baltimore District Office.

Find additional information on 7(a) business loans here.

The SBA is also waiving upfront fees for SBAExpress loans of $350,000 or less for veterans. These loans qualify for a 50 percent guaranty from the SBA. This benefit became effective on Jan. 1, 2014 and will continue until Sept. 30, 2014.

Find additional information on SBAExpress loans for veterans here.

The Maryland Governor’s Commission on Small Business, created by Governor Martin O’Malley in 2010, applauded these waivers during its recent winter meeting.

“The SBA has really made a difference for small businesses in our State. I’m glad to see their loans become even more accessible,” said Ackneil Muldrow, chairman of the GCSB.

Edward Knox, the lead SBA lender relations specialist at the Baltimore District Office, addressed members of the GCSB on the changes, emphasizing the SBA’s ongoing partnership with the Maryland Department of Business and Economic Development.

SBA-backed loans help reduce the collateral required by small business owners in need of funding. SBA programs may reduce the risk to the business owner and the participating bank, but they do not reduce the quality of the investment, according to Knox.

He cited Baltimore-based Under Armour, now a world famous sportswear brand, as an example of a once-small business that experienced rapid growth after receiving an SBA-backed loan.

“An SBA guaranty is not used to make a bad loan good. It simply enhances an otherwise good loan,” Knox said.

Military construction projects in Maryland have amounted to over $1.5 billion in spending over the past three fiscal years—but not all of those projects were awarded to in-state companies. In fact, in fiscal year 2013, only 34 percent of the contracts went to Maryland-based companies, officials said on Tuesday, during the state’s kick-off of a new initiative to train contractors in competing for lucrative federal contracts.

Secretary Dominick Murray of the Department of Business and Economic Development and Secretary Leonard Howie of the Department of Labor, Licensing and Regulation, speaking outside Baltimore City’s historic P. Flanigan & Sons, vowed to help swing the contracting awards process back in Maryland’s favor. “We want to see a super-majority. We want to see more than 75 percent, at least, of these contracts going to Maryland-based firms,” Howie said.

The initiative centers around a series of upcoming workshops and events, free and open to all Maryland contractors.

The workshops will be held on Tuesday, Oct. 29, from 1 p.m. to 4:30 p.m. at Camden Yards Warehouse in Baltimore, and on Thursday, Oct. 31, from 8:30 a.m. to noon at the Prince George’s County Economic Development Corp. Registration is available online here . Additionally, a session on Army Corps of Engineers procurement plans will be held on Tuesday, Nov. 5, from 8 a.m. to noon at the Sheraton Baltimore City Center. The second event, “Contract Connections for Military Construction Contracting,” will include 200 companies and feature specific contracting and sub-contracting opportunities and one-on-one meetings with procurement officers. It will be held on Monday, Nov. 18, from 8 a.m. to noon at the BWI Hilton in Linthicum Heights.

James Russ, president of the Maryland Transportation Builders and Materials Association said he’s encouraging contractors across the state to get involved. “I think it’s a great opportunity for the businesses, a great opportunity for the working people who work for these businesses, and a great opportunity for Maryland because the dollars internally will be spent in Maryland, as opposed to folks coming from out of the area, that are enjoying these contracts today,” Russ said.

 

By Nick Sohr, Managing Editor, MDBIZNews

The inaugural InvestMaryland Challenge business competition has drawn 259* applicants who will be competing for three $100,000 prizes and about $150,000 worth of in-kind business services.

The challengers hail from at least 10 states, including Maryland and Washington D.C. (The Department of Business and Economic Development is still sifting through the list. The deadline was midnight.)

More than 60 judges, most of them professional investors and entrepreneurs themselves, will gradually winnow the list down through early 2013 and the winners will be announced in April.

Top prizes will be awarded in life sciences, information technology and an open, general category.

Maryland companies can enter any of the categories. Out-of-state companies can enter the general category and would be expected to establish a place of business in the state and spend at least 51 percent of the grant money within the state.

The Challenge is funded by InvestMaryland, which raised $84 million in March to make venture capital investments in promising, young Maryland companies.

*We reported the contest drew 257 applications when this item was first posted. The final tally is actually 259.

By Nick Sohr, Managing Editor, MDBIZNews

Plasmonix and Bambeco have received the latest investments through InvestMaryland, the Department of Business and Economic Development announced Thursday.

The state made equity investments of $100,000 in Plasmonix and $200,000 in Bambeco, which also received $400,000 through InvestMaryland last month.

“Companies like Plasmonix and Bambeco continue to shape the future of Maryland’s economy by growing the jobs of tomorrow,” Gov. Martin O’Malley said. “These are the first of what will be dozens of investments over the coming months thanks to InvestMaryland’s significant impact on our State’s innovative companies.”

InvestMaryland is the largest venture capital investment initiative in Maryland’s history. In March, the State raised $84 million for the program through an online auction of tax credits to Maryland insurance companies.

Two-thirds of the InvestMaryland funds will be managed by carefully screened private venture firms, who will invest the funds with a commitment to return, if successful, 100% of the principal and 80% of the profits to the State’s general fund. Grotech Ventures was tapped last week as the first InvestMaryland partner and received $12 million to invest on behalf of the state. The remaining third will be invested by the state-run Maryland Venture Fund.

So far, the state has made eight investments through InvestMaryland. DBED has also launched the InvestMaryland Challenge, a business competition that will award three $100,000 top prizes and about $150,000 worth of in-kind business services to other entries.

Applications for the competition are due today (Thursday 12/13) by 11:59 p.m. EST.

“The speed with which the InvestMaryland funds are being disbursed and the strength of the companies in which we are investing show how critical this program is to the State’s entrepreneurs and start-up community,” DBED Secretary Christian Johansson said. “Investments from programs like InvestMaryland and its partners in the private sector can propel entrepreneurs from innovation to commercialization to company formation to job creation.”

Plasmonix, is a biotechnology company specializing in metal-enhanced fluorescence, which is used in cell detection for medical research and clinical diagnostics. The technology has potential applications across the life science, as well as in cosmetics, apparel, paints and lighting.

“Plasmonix is grateful for the continued support from the Maryland Venture Fund and the Department of Business and Economic Development,” said William Gust, president and CEO of Plasmonix. “These funds are critically important to the ongoing development and commercialization of Plasmonix’s technology and we would not be where we are today without this support. We hope to repay the confidence demonstrated in Plasmonix by adding jobs and growing the company here in Maryland.”

An online retailer of sustainable products, Bambeco’s catalog includes solar-powered tea lanterns, recycled scrap steel trash bins, bicycle chain bottle openers and briefcases made from recycled truck tires with seatbelt shoulder straps. The company has 24 employees and expects to double its staff in the next two years.

“We are honored to be a recipient of venture capital funding through InvestMaryland,” said Susan Aplin, Bambeco president and CEO. “Forty percent of annual retail sales in the United States occur during fourth quarter. These funds allow Bambeco to secure the necessary inventory for our planned holiday sales. We are thankful for the additional investment from InvestMaryland and thank Maryland Venture Fund, the Department of Business and Economic Development, and Governor O’Malley for their continued support as we work to create jobs and help grow Maryland’s economy.”

By Nick Sohr, Managing Editor, MDBIZNews

The first phase of the inaugural InvestMaryland Challenge business competition is nearly over. Applications are due Thursday for businesses across the country looking to claim one of the three $100,000 top prizes or any of the in-kind business services worth a total of $125,000.

As of Monday morning, the Department of Business and Economic Development had received 180 applications from 10 states, including Maryland and Washington D.C. Applications have come from as far away as Florida and California.

The Challenge will award three $100,000 prizes to the top companies in life sciences, information technology and an open, general category. Winners will be announced in March. (View the full timeline here.)

Maryland companies can enter any of the categories. Out-of-state companies can enter the general category and would be expected to establish a place of business in the state and spend at least 51 percent of the grant money within the state.

The Challenge is funded by InvestMaryland, which raised $84 million in March to make venture capital investments in promising, young Maryland companies.

Here are a few of the more than 60 judges — professional investors, technologists, academics, and others with expertise to lend to entrepreneurs — discussing the competition:

By Nick Sohr, Managing Editor, MDBIZNews

Grotech Ventures, a local venture capital firm, will invest $12 million on behalf of the state through the InvestMaryland program, the state announced Thursday.

Grotech is the first venture partner for InvestMaryland.

The Maryland Venture Fund Authority, which oversees InvestMaryland, tapped Grotech “because of its long history investing in early stage technology companies in Maryland and overall solid record of investment,” said authority Chairman Peter Greenleaf, who is also president of Gaithersburg-based MedImmune.

InvestMaryland, created in 2011 raised $84 million in March to invest in promising young Maryland companies in life sciences, cyber security, information technology, green energy and other targeted industries.

Private venture firms will invest two-thirds of that money, returning all of the principal and 80 percent of the profits on successful investments. The state will invest the rest.

Grotech’s $12 million is a little more than 20 percent of the $56 million that will eventually be disbursed to private venture firms.

“Through partners like Grotech and other venture firms that will invest these funds in the jobs of tomorrow, we continue to prove that Maryland remains on the cutting edge of innovation, and that our greatest assets are the talents, skills, creativity, ingenuity, and education of our people,” Gov. Martin O’Malley said.

Grotech was founded in 1984 and has operations in Maryland and Virginia. Its investment portfolio includes technology companies such as Advertising.com, Living Social, MicroProse, Zenoss and CDNow.

“Our goal with InvestMaryland is to plant the seeds for the next generation of innovative companies – the next Google, the next Microsoft – right here in Maryland,” said Christian Johansson, secretary of the Department of Business and Economic Development.

InvestMaryland builds on the success of the Maryland Venture Fund, which will receive most of the state’s share of the $84 million. The fund was seeded with $25 million 17 years ago and has made more than 100 investments, generating returns of more than $67 million, creating 2,000 jobs and spurring more than $1 billion follow-on private investment.

So far, four companies have received investments through InvestMaryland. Brainscope, of Bethesda, received $250,000 and Rockville-based Maxtena, $560,000. Two Baltimore companies, Bambeco and PathSensors, received $400,000 and $200,000, respectively.

InvestMaryland funds will also be awarded through the InvestMaryland Challege, a $425,000 business competition open to Maryland companies and others willing to move to the state. Through Tuesday, the Challenge had 156 applicants.

The state will give away three $100,000 prizes, one each in life sciences, IT and a general, open category. Entrants can also win $125,000 in in-kind business services.

Grotech Ventures was unable to comment due to legal restrictions on public statements during their fundraising period.

By Nick Sohr, Managing Editor, MDBIZNews

Social & Scientific Systems, Inc.’s headquarters and the company’s 300 employees will remain in Silver Spring for at least a decade, according to a deal announced Wednesday by the state Department of Business and Economic Development.

“By working with the leadership of Social & Scientific Systems and Montgomery County to retain the company’s operations here, we are preserving 300 highly-skilled jobs and ensuring that this cutting-edge company continues to call Maryland home,” said DBED Secretary Christian Johansson.

County Executive Isiah “Ike” Leggett said the company is a “vital component to ensuring the continued growth and success of our local business community.”

DBED provided the company with a $650,000 conditional loan and Montgomery County, a $350,000 grant, both conditioned on the company staying put through 2023 and maintaining a staff of at least 300 in Silver Spring. The financial assistance will help the company renew its lease on its office space

Social & Scientific Systems is an employee-owned public health company that provides technical, research, and program management services to government and other clients to mitigate the effects of HIV/AIDS and other deadly diseases.

Founded in 1978, the company has supported clinical trials around the world, providing program monitoring and evaluation services, collecting epidemiological data, coordinating conferences, and analyzing Medicare data. Today, the company has more than 500 employees in offices in Silver Spring; Rockville; Durham, North Carolina; Jakarta, Indonesia; Kigali, Rwanda; and Kampala, Uganda.

“We would like to thank the State and Montgomery County for the assistance they’re providing our company,” said President and CEO James J. Lynch, PhD. “We have been located in Silver Spring for the past 11 years, and are pleased to be staying, as our employees feel that they are a part of this community. We’re looking forward to a successful future here.”

By Nick Sohr, Managing Editor, MDBIZNews
Dust off your business plan and sharpen up your elevator pitch. The deadline for the InvestMaryland Challenge is just a month away.

The Department of Business and Economic Development had received 95 entries for the business competition as of noon Wednesday.

The Challenge will award three $100,000 prizes to the top companies in life sciences, information technology and an open, general category.

Maryland companies can enter any of the categories. Out-of-state companies can enter the general category and would be expected to establish a place of business in the state and spend at least 51% of the grant money within the state.

“The InvestMaryland Challenge is a critical piece of the state’s efforts to ensure entrepreneurs have what they need to grow and thrive in Maryland,” said Michelle Jackson, DBED’s director strategic industries and innovation. “The prize money is important but so, too, are the lessons applicants will learn from putting their ideas before our panel of judges and the connections they will make with potential mentors, partners and investors. Those connections will strengthen Maryland’s entrepreneurial ecosystem and pave the way for more robust growth in life sciences, information technology, cyber security, green energy and other high-tech sectors.”

Applications are due Dec. 13 and awards will be made in March. Recently, the contest’s more than 60 judges met to discuss the competition. A few them shared their thoughts on camera.

By Nick Sohr, Managing Editor, MDBIZNews

The Department of Business and Economic Development has invested $1.1 million in three more Maryland companies through the InvestMaryland program, DBED Secretary Christian Johansson announced Tuesday at TEDCO’s Maryland Entrepreneur Expo.

“InvestMaryland plays a critical role in taking an idea from innovation to commercialization to company formation to job creation,” Johansson said. “Our investments through this program will attract significant follow-on capital from the private sector, create well-paying jobs and support a wide range of companies in biotechnology, cyber security, green energy and other targeted industries.”

Maxtena, of Rockville, received a $560,000 investment. South Baltimore’s Bambeco got $400,000 and PathSensors, located in the University of Maryland BioPark in West Baltimore, got $200,000.

These commitments follow InvestMaryland’s first-ever outlay, a $250,000 investment in Bethesda-based Brainscope in September.

“When we make strategic investments in cutting-edge companies like Maxtena, PathSensors and Bambeco, we are strengthening Maryland’s leadership in the Innovation Economy,” Gov. Martin O’Malley said. “With a total of $84 million to invest in the State’s best and brightest start-ups, we are stimulating our economy and creating jobs not just for today, but for generations to come.”

InvestMaryland was the governor’s top economic proposal during the General Assembly’s regular session in 2011. It set aside $100 million in insurance premium tax credits to be auctioned off to raise money to make venture capital investments in young, high-tech Maryland companies. DBED’s first-of-its-kind online tax credit auction in March raised $84 million, $14 million more than expected.

Two-thirds of the $84 million will be managed by private venture capital firms on behalf of the state and the rest will flow into state financing programs, including the Maryland Venture Fund, which made the three investments announced Tuesday. Last month, a 2005/2006 MVF investment in Fidelis Security, a cyber security company, returned $2.2 million to the fund.

Today’s Announced Investments

Founded in 2006, Maxtena has become a global leader in the development and production of miniature antennas for satellite phones, military radios, handled navigation devices, GPS trackers and other wireless devices. The MVF led a Series A preferred stock investment round in Maxtena.

“This funding award will support our growth in the areas of advanced antenna and wireless communications and will allow us to continue developing novel technologies that we hope will drive the new internet infrastructure with smaller and higher efficiency devices,” said Stanislav Licul, Ph.D., president and CEO of Maxtena.

PathSensors has developed a pair of products that detect biological threat agents in food and the air. BioFlash-E and BioFlash-AF rapidly identify pathogens in near real-time. The Maryland Venture Fund invested $100,000 in the company in 2010.

“PathSensor’s CANARY technology is providing rapid pathogen testing that ensures a safe and reliable supply of food products for the world’s growing population,” said Ted Olsen, CEO of PathSensors. “These funds will support the development of new products for the food processing industry.”

Bambeco CEO Susan Aplin shows off one of her favorite products, solar-powered Aurora Glow String Lights.

Bambeco is an online retailer specializing in eco-friendly home décor. The company is expanding, taking over more office and warehouse space as it adds to its staff of 24 employees. Bambeco’s products have been featured by USA Today, Every Day with Rachael Ray, People Magazine, The Today Show and the Emmy-winning sitcom Modern Family. The MVF invested a total of $300,000 in Bambeco during two earlier fundraising rounds.

“As a result of the investment, Bambeco is moving into a new 22,000- square-foot facility this month. We’re hiring people now and plan to double the size of our staff in the next 12 months,” said Susan Aplin, CEO of Bambeco. “The continued state support through the Maryland Venture Fund and InvestMaryland has been essential to our growth.”

By Nick Sohr, Managing Editor, MDBIZNews

Following Maryland’s strong September jobs report last week, the researchers here at the Department of Business and Economic Development distilled the numbers down to these 10 quick takeaways:

-Maryland added 9,800 jobs last month. The 0.4 percent growth rate was 5th best in the country

-The private sector accounted for 9,600 of those jobs. That 0.5 percent growth rate was 4th best in the country.

-Big gains came from professional and business services (4,100 jobs), retail trade (1,900), construction (1,300), health care (900) and private education (700).

-Maryland has gained 13,300 jobs in 2012, including 12,300 private sector jobs.

-In the last 12 months (from September 2011 to September 2012), Maryland has added 25,500 jobs, including 24,100 private sector jobs.

-In the past year, Maryland has added 2,900 architecture and engineering jobs. The 7 percent growth rate is No. 2 in the country.

-Professional, scientific and technical services firms have added 10,100 jobs in the last year. That 4.4 percent growth is 12th fastest nationwide.

-Research and development services have added 500 jobs, good for 1.6 percent growth and the No. 4 spot in the country.

-Maryland has added 108,800 jobs since employment bottomed out in February 2010. That’s good for a 75.2 percent recovery rate, 7th best in the nation. (The country as a whole has recovered 48.5 percent of the jobs lost.)

-The private sector has added 91,900 jobs since the bottom of the recession, a 59.6 percent recovery rate.