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BALTIMORE, MD (July 29, 2013) – Governor Martin O’Malley today announced that two Maryland tech companies received investments totaling $350,000 through the State’s InvestMaryland program, which was created by Governor O’Malley and the General Assembly to make venture capital investments in promising Maryland startups in high-tech, high-growth fields. The State invested $200,000 in SocialToaster, a Baltimore firm specializing in social media and customer engagement, has been approved for a $200,000 investment and $150,000 in ReelGenie, a new online service based in Silver Spring that creates high-quality videos from a customer’s photos and digital media.

“Supporting our entrepreneurs, startups and small businesses is a top priority for Maryland as we grow our Innovation Economy. Our high-tech entrepreneurs place Maryland at the forefront of innovation and discovery,” said Governor O’Malley. “We’re pleased to make these investments in ReelGenie and SocialToaster, as well as the many others that have benefited from the InvestMaryland program, and we look forward to their future growth and success in our State.”

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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

The Maryland Venture Fund Authority will tap a handful of venture capital firms by early July to invest the lion’s share of the state’s $84 million InvestMaryland program, authority Chairman Peter Greenleaf said Thursday.

“You can feel comfortable that the range of investments [is] what we’re looking at, from early to late stage, across all areas of technology and entrepreneurialism in the state,” Greenleaf told some 200 entrepreneurs and investors at a forum in Rockville.

On June 28, the authority will receive recommendations from a consultant as to which firms to invest with and then will announce its decisions by the first week of July, according to Greenleaf.

Private venture capital firms will invest $56.4 million, or about two-thirds of the money raised for InvestMaryland, the largest capital program in the State’s history.

The authority expects to choose between five and eight firms that would receive between $7 million and $12 million each from the program. Those firms will invest in seed, early stage and growth companies, with a focus on information technology and life sciences. They will return to the state all of the principal and 80 percent of the profits from successful investments.

Another $20.7 million will be invested by the state’s Maryland Venture Fund, which will direct attention to seed and early stage startups. The fund, originally seeded with $25 million, has seen returns of about $64 million and helped create 2,000 jobs over its 17 year history.

“The goal [of InvestMaryland] is to create thousands of jobs,” said Christian Johansson, secretary of the Department of Business and Economic development and the architect of the venture capital program. “The goal is to position Maryland as a leader in science, security discovery, innovation.”

The remaining $6.9 million will go to the Maryland Small Business Development Financing Authority, another DBED business finance program.

State officials expect the InvestMaryland program to deliver much-needed capital and financial assistance to 200 to 400 businesses and spark interest from outside investors in individual firms and the state’s startup community as a whole.

The investments of the Maryland Venture Fund have been followed by $1 billion in private capital, according to Johansson.

InvestMaryland is a much larger injection of capital into the market. The program raised $84 million — $14 million more than expected — by auctioning $100 million in tax credits to insurance companies.

The state received the first $28 million payment this month, and will receive the same amount in 2013 and 2014.

“We’re trying to not just create assets, but create long-standing, lasting impact to the state, which will include jobs that reside here,” said Greenleaf, who is also the president of MedImmune.

By Nick Sohr, Managing Editor, MDbizMedia

Peter Greenleaf visited the Department of Business and Economic Development recently to oversee the historic tax credit auction that raised $84 million for the state’s InvestMaryland program. Greenleaf took some time out from his duties as chairman of the Maryland Venture Fund Authority for a quick Q&A about his day job — running MedImmune, one of Maryland’s most successful life sciences companies.

 

Q: We’ve heard about new a vaccine and new facilities. What’s going on at MedImmune?

A: “In the last several years, we’ve been investing incredibly, locally and, actually, around the world and expanding our operations. We’ve sold the company to AstraZeneca but they’ve invested in us heavily and we’ve been trying to grow their presence in biologics globally. A lot of that is in the Maryland area. We’ve doubled the size of the employee workforce in Maryland. We’re now, globally, about 4,000 people, 2,600 of them right here in Maryland. We’ve built facilities. We have a huge campus in Gaithersburg and we’ve just this past year finished a biomanufacturing facility in Frederick that we started in 2006, which represented north of a $500 million capital commitment from us. It puts us in the top tier of producers of monoclonal antibodies globally. It’s a world-class, first-rate facility. It’s going to add something like 300 jobs to that area. I think we’ll have 500 total people in Frederick alone. It’s actually been regulatory inspected and it’s online and we’re starting to push products through it. We signed a joint agreement with Merck to partner with them and work on all of them on all of their biologics products out of that facility. We’ve significantly progressed our pipeline. We have north of 150 projects that we’re pushing forward. These are projects that hopefully become drugs down the road. And we’ve progressed them not only into pre-clinical trials, but into human clinical trials and later-stage trials. And finally, this year, we got approved in the U.S. and Europe, a quadrivalent vaccine for influenza. Typical vaccines carry three strains of the virus and protect from three strains. We’re actually the first to be approved by the FDA for a vaccine that covers four strains of the virus. Usually there are three circulating. This adds one, hopefully adds greater protection from influenza.”

Q: What does that mean for MedImmune?

A: “We’re a company that’s done a lot of firsts. From the early days of having the first polyclonal antibody to protect premature infants from respiratory syncytial virus to Synagis, which was the first monoclonal antibody approved for an infectious disease, to the HPV vaccine, we’ve been a company of firsts. Our company is about innovation. It’s about solving human health issues. And I think this represents our progress toward that end.”

Q: In many ways, MedImmune is the face of the biotech sector in Maryland. What’s the state of the sector now and what do you see coming next?

A: “Classically, this sector has been because of its proximity to the agencies, to NIH, to the National Cancer Institute and to the major academic centers here, a broad center of early research. Great science comes out of this area. We have access to great researchers. And we’ve been one of the fastest growing sectors out there. We’ve actually owned for the past five years the fastest growing sector in the country. To me what’s really exciting, you’re starting see a lot of commercial entities start to blossom. In the life science sector, you have companies like United Therapeutics, MedImmune, Human Genome Sciences. You have companies that have made major progress, like MacroGenics. So there’s a real base of not only research entities, but commercial entities that are growing in the area. I think it bodes well for the area in job creation, for driving innovation and for leveraging the early phase science that has been going on here historically in the academic centers. So, there’s a strong future for life sciences and biotechnology in the Maryland area.”

Q: What is MedImmune’s place in that strong future?

A: “Right now I would consider us a sort of anchor company in the area. Twenty-five years ago we started our base business here with $2.5 million of venture capital funding. Twenty-five years later, we’ve launched north of five products. We’re a billion-and-a-half dollars in revenue. We have 4,000 employees globally. We’ve been adding anywhere between [500] and 800 jobs a year over the last several years [and making] massive capital investments. Obviously that creates jobs for the area. It creates career paths for people. It does a lot for the communities in which we live in, as well as work. I think MedImmune is a success story. It can be held up there in other sectors like the Under Armours of the world, where you start with an idea, you’re innovative, you push that idea, you get funding for it and it grows and blossoms into a much larger entity. I think we’re an example people should look at and say ‘It can be done. Proof positive, MedImmune was able to do it and now Human Genome and others are well down the same path.’”

InvestMaryland raised $84 million on Thursday to invest in small, high-tech Maryland businesses. Afterward, Christian Johansson, secretary of the Department of Business and Economic Development, and Peter Greenleaf, president of MedImmune and chairman of the Maryland Venture Fund Authority, shared their thoughts on the highly successful auction and what’s next for the state-funded venture capital effort.

By Nick Sohr, Managing Editor, MDbizMedia

The state raised $84 million Thursday to fuel InvestMaryland, the largest state-funded venture capital program effort in the Maryland’s history.

The money will be invested in young, high-tech companies in some of the most innovative sectors in Maryland, including the life sciences, information technology and green energy.

“Today was a huge haul for InvestMaryland,” said Christian Johansson, secretary of the Department of Business and Economic Development. “This is a big day for entrepreneurs. This is a big day for Maryland.”

Maryland Venture Fund Authority members and staffers watch the results of a tax credit auction to fund the InvestMaryland venture capital program.

One-third of the money raised, or $28 million, will go to the state’s Maryland Venture Fund and two-thirds, $56 million, will be allocated to private venture capital firms to be invested in high-tech Maryland companies.

On successful investments by private venture firms, Maryland will recoup all of the principal and 80 percent of the profits.

The expected benefits, however, go beyond those returns.

“The last time we [seeded the Maryland Venture Fund], we only invested $25 million,” Johansson said. “That $25 million returned $61 million to taxpayers. On top of that, it created 2,000 jobs.”

(Companies that have benefited from Maryland Venture Fund investments include A&G Pharmaceutical Inc., Bambeco and Optoro Inc.)

Peter Greenleaf, president of Gaithersburg-based MedImmune and chairman of the Maryland Venture Fund Authority, which oversees InvestMaryland, said the “infusion of capital is going to make a real difference for companies in the state of Maryland.”

“The hunger and need for capital out there, all the way from seed level, all the way through the later-stage development companies is very, very high,” Greenleaf said. “The current economic environment, the economic environment over the last five years, has been toughest in some cases on some of our smaller, entrepreneurial companies.”

InvestMaryland, Gov. Martin O’Malley’s top economic proposal in 2011, was approved by the General Assembly last April. The legislation authorized the venture authority to auction off $100 million in tax credits to insurance companies and to use the proceeds to fuel the venture capital program.

Unsure of the appetite insurance companies would have for the credits, members of the venture fund authority only had to wait four minutes on Thursday.

The auction launched at 11 a.m. and by 11:04, insurance companies had bid on all $100 million in credits, most of them at the price floor of 70 cents on the dollar.

Then the price started to climb.

By 11:25, the price was 80 cents on the dollar and crept higher, even as bidding slowed.

The auction was extended by more than 12 minutes as insurance companies sought to clear the threshold and claim some of the credits.

In the end, 24 bidders made 47 bids. The final price: 84 cents on the dollar. The haul: $84 million for InvestMaryland.

Maryland was the first state to fill a venture capital fund by auctioning tax credits, Johansson said.

“If we would have gone with other approaches, we would have raised $14 million less, at a minimum,” he said.

DBED will solicit proposals from venture capital firms interested in participating in the program starting March 20.

The authority will recommend venture firms to the department in May. The allocations of investment capital to venture firms and the first investments will be made in June.