Governor O'Malley Testifies before Senate, House on Bill to Create Jobs, Fuel Investment in Innovation Economy
InvestMaryland would infuse $100 million in seed, early-stage companies at no up-front cost to taxpayers
ANNAPOLIS, MD (February 16, 2011)–Surrounded by hundreds of supporters, Governor Martin O’Malley today testified before Maryland Senate and House committees in support of InvestMaryland, his 2011 signature legislative initiative to create thousands of jobs and fuel investment in Maryland’s Innovation Economy. InvestMaryland - SB 180/HB173 - seeks to create a public-private partnership to invest $100 million in Maryland’s start-up and early stage companies, effectively quadrupling the State government’s previous investment and spurring a culture of organic growth in the State.
Among its benefits, the program has the potential to create thousands of jobs in Innovation Economy sectors – life sciences and biotechnology, cyber security/IT and clean/green tech and attract billions of follow on capital, all with no immediate cost to taxpayers. Joining Governor O’Malley at the witness table were a number of Maryland business and education leaders and industry experts, including Johns Hopkins University President Ron Daniels, Greater Baltimore Committee CEO Don Fry, Maryland Department of Business and Economic Development Secretary Christian S. Johansson and Dr. Julia Sass Rubin, a Rutgers professor and national expert on state-sponsored venture capital programs.
“As a global hub of innovation – a leader in science, security, health, discovery and information technology – Maryland is well-positioned to transform the challenges we face into jobs and opportunity,” said Governor O’Malley. “With our highly-educated workforce and the skills and talents of our people, InvestMaryland will help us take a significant step forward in generating capital for our businesses and creating jobs for our families as we fight for our economic future.”
“Two aspects of InvestMaryland make it particularly strong and a great model for other states to emulate,” said Dr. Sass Rubin, a professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “First, the program requires private venture funds that receive investments through this program to return all of the State’s principal investment and 80 percent of the profits, as they would do for any private-sector investors. Second, the program uses an auction to monitize the tax credits, which increases competition and efficiency. Both of these provisions ensure that Maryland’s taxpayers are getting the most for their investment.”
InvestMaryland is a premium tax credit program designed to fuel $100 million in venture capital investment in Maryland businesses by auctioning premium tax credits to insurance companies that would bid between $.70 and $1.00 on each credit. The funds would be split, with $50 million deposited into the State’s 15-year-old Maryland Venture Fund (MVF), with a portion of those funds allocated to the Maryland Small Business Development Financing Authority (MSBDFA). Over its life, the MVF has invested $25 million into hundreds of start up and early stage technology and life sciences companies, generating a $61 million return. The remaining $50 million would be placed with three to four private venture capital firms that will be selected by an independent third-party, which will return 100 percent of the principal investment to the State and 80 percent of the profits. Insurance companies will be able to claim tax credits beginning in 2015.
“The structure of InvestMaryland is unique in that it seeks the maximum benefit for taxpayers, while investing in our Innovation Economy, fueling the jobs and companies of tomorrow and creating in an economic climate where entrepreneurs can thrive,” said Secretary Johansson. “Our goal is to invest in the most promising companies, so that we can create an evergreen fund that will ensure a continuous supply of capital for future investments.”
To galvanize support for today’s hearings, InvestMaryland Day was held earlier today and drew hundreds of legislators, entrepreneurs, venture capitalists and business leaders. The advocacy event featured keynote remarks by Steve Dubin, CEO of Martek Biosciences Corp., one of Maryland’s home-grown companies and a product of the University of Maryland System. The company recently announced its sale for more than $1 billion to Royal DSM N.V., the global life sciences and materials sciences company headquartered in the Netherlands.
“The InvestMaryland program excites me not only because we will be helping to fund many promising start-up companies, but because of the impact that the State can have by leading deals and encouraging other investors to co-invest with and within the State,” said Dubin, who is also Co-Chair of the Maryland Economic Development Commission. “InvestMaryland will attract venture funding to Maryland as well as companies that will want to locate in a State where early-stage money is more readily available.”
Throughout the morning, InvestMaryland Day attendees heard from successful entrepreneurs like Dr. Joseph Amprey, Chief Business Officer of Gaitherburg-based biotherapeutics company Zyngenia who formerly ran MedImmune’s venture fund and Carol Nacy, Founder and CEO of Sequella and a recognized leader in the bioscience industry who is working on a cure for tuberculosis. Sponsors of InvestMaryland Day included Comcast; Neuberger, Quinn, Gielen, Rubin & Gibber, P.A; Venable, LLP; Chesapeake Regional Technology Council; Greater Baltimore Technology Council; Maryland Business Incubator Association; Mind Over Machines; Tech Council of Maryland and TEDCO.
Maryland has an outstanding infrastructure to support an Innovation Economy. Last month, the Milken Institute again ranked Maryland #2 in the nation for technology and science assets. According to study results, while Maryland received high rankings in human capital investment, research and development inputs, technology and science workforce, and technology concentration and dynamism, it lagged behind other states in risk capital and entrepreneurial infrastructure, demonstrating the need for InvestMaryland. The Index provides measurements of the technology and science assets for states, ranking them on their ability to foster and sustain a technology sector, which research has shown is a crucial factor in determining a region's future economic success. The previous study was conducted in 2008.