The Maryland Technology Development Corp. contributed $1 billion to the state’s economy and created more than 4,000 jobs in 2015, according to a new study.
In a December report, nonprofit research firm Battelle described TEDCO’s economic impact as a significant and growing contribution to Maryland’s economy, but also pointed to room for improvement. TEDCO lags behind its peers in venture capital investment, commercialization and technology business activity, and Maryland as a whole is “still not fully capitalizing on its significant innovation and technology assets,” the report’s authors wrote.
“What this comes down to is funding and capacity,” said John Wasilisin TEDCO’s newly minted president and chief operating officer. “Not every proposal should be funded, but we’re probably saying no to a good 10-12 percent of proposals and business plans that deserve funding, but we just don’t have it.”
TEDCO is the state’s venture capital arm with business development and funding programs designed to back early stage companies at times when they often struggle to secure other funding that, without, may prevent them from growing. The agency’s budget is about $18 million, half of which is dedicated to a fund that backs stem cell research. The remaining $9 million pays for administrative overhead, programs that support technology coming out of universities, and individual entrepreneurs’ business ideas. In October, the agency took over management of the state’s $106 million Maryland Venture Fund, a venture capital program for early stage companies that have already received some funding.
The Battelle report and Wasilisin characterized TEDCO’s work in cultivating and growing early stage companies as an integral piece of the state’s effort to grow the economy and job opportunities in the future. The organization’s economic impact is expected to grow to $1.4 billion in 2020, creating as many as 6,520 jobs, according to the report.
Perhaps a sign of TEDCO’s potential as an economic engine, Battelle found that the agency lags behind its peers in venture capital investment and commercialization, and that there is significant unmet need for its services and funding.
“The innovation economy in Maryland has grown significantly, the momentum has grown significantly,” Wasilisin said. “We just have to find a way to keep up.”
In some cases, TEDCO is making more awards, but the number of projects that receive funding represent a shrinking portion of applications.
For example, awards for TEDCO’s Technology Validation Program grew 62 percent between 2004 and 2015, when the agency granted 21 awards. But the growth in applications far outpaced the number of awards given. Applications grew 282 percent during that time period, from 22 in 2004 to 84 in 2015. While 59 percent of applications received funding in 2004, only a quarter of 2015 applications were funded.
Overall, TEDCO is able to fund about a quarter of the projects and businesses that apply for its programs, Wasilisin said.
The success of TEDCO’s programs demonstrated in the Battelle report shows that investing further in the agency can help the state better capitalize on its technology potential.
“I think what it says is the innovation economy is an important plank in the platform of economic development in the state,” Wasilisin said. “We’re not the be-all, end-all but it’s a kind of economic development that is important.”
A bigger budget would certainly give TEDCO more money to invest in companies, but Wasilisin said the agency did not ask the state for a budget increase in fiscal 2017 because leaders want to first get up to speed with their new responsibility for the Maryland Venture Fund, Wasilisin said.
But the agency has begun laying the groundwork for a larger role in venture capital investing in Maryland in other ways.
TEDCO in November hired entrepreneur and venture capitalist Andy Jones to manage the Maryland Venture Fund and elevate it from a supporting investor to a leader.
With $106 million in assets, the Maryland Venture Fund is TEDCO’s largest fund and, leaders think, the agency’s most promising opportunity to elevate TEDCO’s role as an investor.
Jones aims to make TEDCO a leading investor in the companies it backs, rather than a supporting investor in a financing round led by another firm. As the lead investor, TEDCO will play a bigger role in driving additional funding to its investment companies and advising them.
The agency and its board are also researching options for expanding other support services for entrepreneurs — aside from investment dollars — and this summer hope to bring to Gov. Larry Hogan some ideas for growth that could be included in the fiscal 2018 budget.