Donald Fry: Tapping into Maryland’s potential for innovation

Posted by on in Blog
  • Font size: Larger Smaller
  • Hits: 5652
  • Subscribe to this entry
  • Print
  • Report this post
By Donald C. Fry

Well over 200 entrepreneurs and business advocates descended on Annapolis earlier this week to urge state lawmakers to enact an O’Malley administration proposal that would create Invest Maryland -- a premium tax credit program aimed at generating $100 million in private investment funding from insurance companies for early-stage bioscience and technology businesses in Maryland.

Speaking to individual lawmakers and testifying to two key budget committees, advocates articulated a straightforward answer to the key question: “Why does Maryland need an influx of newly-available investment funding for emerging tech-driven businesses?”

The answer? Compared to other states that are aggressively nurturing the growth of their bioscience and technology industry sectors, Maryland lags behind in available early-stage financing.

That’s a significant economic development shortcoming for a state that is so rich in research and innovative ideas percolating from within its plethora of research institutions.

There are three major components to a healthy entrepreneurial culture -- innovation, entrepreneurs, and capital, Robert A. Rosenbaum, president of TEDCO, the state’s technology economic development agency, told members of the Senate Budget and Taxation Committee at its February 16 hearing on SB180, the Invest Maryland legislation.

Maryland is rich with innovation, and a generation of new entrepreneurs is emerging here, helped in part by entrepreneurial programs at universities in the state. But when it comes to capital, "This is where we're very short,” said Rosenbaum, a former managing director of a venture fund.

How serious a disability is it to technology-related business development?

It recently cost Maryland a new business that is developing around the allergy-suppression work of Johns Hopkins University researchers, Hopkins President Ron Daniels told lawmakers. The early-stage company will operate in Pennsylvania, which had readily available early-stage funding.

“This was our idea, and it’s going to be developed in another state,” Daniels said.

Other states where an abundance of early-stage seed funding is available include California (Stanford University) and Massachusetts (MIT), also primary competitors with Maryland for leadership in bioscience development, advocates told lawmakers.

Early-stage funding will become increasingly critical to tech transfer not only at Johns Hopkins, but to institutions in the University System of Maryland, where a newly-adopted strategic plan for 2020 places a strong emphasis on fostering entrepreneurship and capitalizing on tech transfer and economic development opportunities.

Investment experts cite the need for early-stage funding in Maryland to get emerging companies through the financing "valley of death," the in-between stage at which entrepreneurs have exhausted most initial start-up investments from friends and angel investors, but need funds to get their new company to a more developed stage that will attract today's venture capital firms.

In Maryland, the effects of the recession on financing have largely evaporated such early-stage funding, advocates say. "Today, if we had to start over again, I'm not sure we could make it in Maryland," said Steve Dubin, CEO of Martek Biosciences, a Howard County-based company that now employs 600, including 250 in Maryland.

TEDCO’s Rosenbaum estimated that, right now, potential demand for early-stage investment funding related to research at Maryland’s institutions could amount to as much as $500 million.

The Invest Maryland legislative proposal, which would generate investment funds by selling tax credits, through an auction process, to insurance companies to offset state taxes that they must pay on premiums.

The tax credit sale would raise approximately $100 million from insurances companies over the next three years, but the costs to the state would be deferred until 2015, when the companies can begin to use the tax credits, in annual 20 percent increments, to reduce their tax liabilities.

The Invest Maryland legislation could directly benefit between 200 and 400 small businesses in Maryland over a five-year period, according to the Department of Legislative Services.

Legislation such as this will almost certainly be amended by lawmakers as it moves through the General Assembly. But it’s important to keep our eye on the core purpose of this proposal –- the need to implement strategic state investments in business growth and job creation.

The existence of such funding initiatives is one of eight consensus prerequisites –- “core pillars” –- for a competitive business environment that business leaders and economic developers detailed in the Greater Baltimore Committee’s recent report: “Gaining a Competitive Edge: Keys to Economic Growth and Job Creation in Maryland.” The Invest Maryland initiative also relates to another of the “core pillars” for job creation and economic growth –- government leadership that unites with business as a partner.

The availability of an early-stage funding program is critical if we are to fully realize the business development potential within Maryland’s vast resources for innovation. Its passage would demonstrate that Maryland is ready and willing to participate in the new economy.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Previous Center Maryland columns by Donald C. Fry:

A 23-year old leadership lesson from the Persian Gulf

Gauging the business contribution to state government funding

How the state lost its way on transportation funding

Budget proposal will be first big 2011 defining moment for lawmakers

GBC to lawmakers: ‘Make job creation and business growth top session priority’

Helping city’s new prosecutor implement a vision

A culture of ‘giving back’ lives in Maryland’s business community

Budget challenges will test government’s capacity for strategic planning

Facing the disconnect over the concept of ‘business climate’

Tax commission delivers refreshing change of pace

‘Reform’ commission to mull tax increase for Maryland corporations

No tsunami in Maryland, but voters deliver ripple of transition

Why isn’t transportation infrastructure crisis on lawmakers’ radar?

Market expert tells a pre-Halloween scary story

Entrepreneurs provide inspiration in a recession

Military is driving Maryland’s anticipated biggest economic spurt in 60 years

MedImmune CEO frames bright future for bioscience

Making transportation a top-tier priority

Primary voters in a mood for transition

Reading Maryland's fiscal tea leaves

Getting beyond sound bites and bumper stickers

Biotech tax credit more popular than ever, but the ‘rock-concert’ lines are gone

Bad timing for upcoming business tax report

For economic indicators, the ‘whipsaw’ effect continues

Do census data foretell a Baltimore city population rebound?

Remember the value of business after the election

New report ranks Baltimore among stronger regions to weather the recession

New living wage proposal: wrong idea, wrong time for Baltimore

Northeast needs more attention from federal rail planners

New national report has familiar ring for Maryland bioscience advocates

New report underscores Maryland’s work force development challenges

State’s health initiative: a ‘win-win’ for employers and their workforces

As Baltimore hikes taxes, are state’s counties next?

After the ‘fiber from heaven’ scramble, what’s next?

BRAC growth no longer a future event – it’s happening now

Economic development is a contact sport

Despite the recession, bioscience growth still percolates in Baltimore

State stumbles in enacting new education collective bargaining process

Wind power has potential in Maryland, but solar emerges as early renewable option

It's not good to be clueless in cyberspace

Amid fiscal shuffle, Maryland lawmakers pass measures to spur business growth

Thankfully, Baltimore leads with substance over style in luring Google

Leave damaging transportation provisions out of the budget

Amended budget continues recession-induced fund shifts and stimulus rescue

General Assembly setting stage for combined reporting push in 2011

Wrong timing for proposal to change Baltimore City school board

Baltimore City isn’t alone in facing pension funding challenges

A government investment program that delivers

Proposed transportation fund raid -- a bad habit continues

Where's the outrage over crime?

Small business is where innovation lives
Rate this blog entry:
0

Donald C. Fry has been the president and CEO of the Greater Baltimore Committee (GBC), the central Maryland region's most prominent organization of business and civic leaders, since November 2002.


Under Don’s leadership, the GBC is recognized as a knowledgeable and highly credible business voice in the Baltimore region, Annapolis and Washington, D.C. on policy issues and competitive challenges facing Maryland. Its mission is to apply private-sector leadership to strengthening the business climate and quality of life in the region and state.


Fry served as GBC executive vice president from 1999 to 2002. From 1980 to 1999 Fry was engaged in a private law practice in Harford County. During this time he also served in the Maryland General Assembly. He is one of only a handful of legislators to have served on each of the major budget committees of the General Assembly.


Serving in the Senate of Maryland from 1997 to 1998, Fry was a member of the Budget and Taxation Committee. As a member of the House of Delegates from 1991 to 1997 Fry served on the Ways and Means Committee and on the Appropriations Committee.


Fry is a 1979 graduate of the University of Baltimore School of Law. He earned a B.S. in political science from Frostburg State College.