Plenty of small businesses seek out bank loans. But now Maryland startups can borrow an executive.
A new program is lending young companies some human capital to help advance their businesses. The Maryland Technology Development Corp., better known as TEDCO, has provided a half-dozen companies with experienced executives as often as two days a week over six months.
For TEDCO, it’s a way to promote the success of startups the state-funded organization has invested in. And for the companies, it’s a chance to tackle problems common to every startup with the help of veteran entrepreneurs.
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“The startup odds for success are pretty low,” said Mark Olcott, co-founder of VitusVet, a company developing an electronic health record system for emergency veterinarians. “One of the geniuses of this program is just that by pairing up entrepreneurs with people who have been down that road before, the goal is to try to avoid mistakes or know what to do when.”
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The program began last year as one of several steps TEDCO is taking to broaden its impact in developing the state’s startup economy. The organization also has launched a program investing in cybersecurity companies, loosened eligibility requirements for some of its key investment funds, and begun the process of absorbing the Maryland Venture Fund, another state program focused on creating technology jobs.
The executives-on-loan program was born out of discussions about potential gaps in the resources available to startups seeking advice and assistance, said Neil Davis, TEDCO’s director of entrepreneurial development.
The organization set aside $500,000 to address those gaps, through the executive program as well as companion efforts to provide executive coaching and orchestrate executive roundtables that bring together CEOs to share ideas, Davis said.
TEDCO provides the services free to startups in its investment portfolio and pays the executives on their behalf.
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“We’re already ‘in,’ if you will,” Davis said. “We’re hoping to do something that’s going to make that company even more successful.”
To accomplish that, the executives are brought in to help a company achieve specific goals or milestones.
For example, the program is providing Clear Guide Medical, a medical device company spun out of Johns Hopkins research, with a temporary chief financial officer. The company is selling a device that helps doctors direct injections that need to be targeted to a specific nerve or other part of the body.
Given the complex regulations over medical devices that CEO Dorothee Heisenberg is trying to navigate, coordinating the web of paperwork to track orders, serial numbers, warranties and inventories was more than she could tackle on her own. So Heisenberg enlisted the help of Nancy Carter, an experienced financial consultant based in Northern Virginia.
“It’s little arcane, small minutiae that really can come up to bite you if you don’t have an idea where it’s all going,” Heisenberg said. “With her help, I think, I can confidently say I know exactly where we are.”
Olcott at VitusVet needed help strategizing a national sales and marketing effort. The company seeks to make pets’ medical records accessible to emergency vets who might not otherwise have access to them after regular business hours or on weekends.
Enter veteran Baltimore entrepreneur Greg Cangialosi to help the company establish separate messages to woo pet owners, general practitioner veterinarians and emergency animal hospitals.
Robert Wray, another veteran startup leader, is getting the help of experienced executive Karl Grover for advice on how to rapidly develop Whitebox, a soon-to-launch e-commerce company. Whitebox notes that as a corporate vice president for Marriott, Grover helped to boost profit for the Residence Inn and Towne Place Suites hotel chains.
Since Grover joined Whitebox in February, the startup’s clients have nearly doubled, Wray said. Whitebox helps manufacturers sell their products online.
TEDCO officials expect to extend the executive loan service to another six or eight companies over the next year. The organization has a large pool of executives waiting to be loaned, depending on the needs of future applicants, Davis said.
In the meantime, the organization is monitoring for the fruits of the executives’ labor.
“We’re going to know a lot more about this in the early fall, Davis said. “We’ll see how well the companies met their milestones … and how much of an impact this program has had.”