These Seed and Early-Stage Investment Funds in Maryland Are Fueling Life Science Startups
Perhaps the single biggest challenge faced by startup entrepreneurs and early-stage life science companies is securing the necessary funding to fuel innovation and growth. The BioHealth Capital Region (BHCR) life science community as a whole faces a similar challenge when it comes to access to venture capital funding; this challenge has been noted by many BHCR thought leaders and well-documented in a host of BioBuzz stories.
While the region has a ways to go before it creates a venture capital infrastructure like Boston or the San Francisco Bay area, it has been steadily improving access to funding via improved regional branding, an increase in investment-focused events, a growing startup ecosystem that is attracting out-of-state entrepreneurs, and the continued growth of early-stage funds for startups and young life science organizations.
The extremely popular Department of Commerce Biotechnology Investment Incentive Tax Credit has also spurred investment by providing investors with income tax credits equal to 50%* of an eligible investment in a Qualified Maryland Biotechnology Company (QMBC). If the company is a Montgomery County, Maryland-based biotech, in addition to receiving the State Incentive Tax Credit, investors may also receive a payment from the County’s Supplemental Program. Applications for the tax credit begin on August 24, 2020, and the credits get used quickly so don’t delay.
Once a startup founder or founders move beyond investing their own money, that of friends and family members and perhaps a few other angel investors, things can start to get complicated fast. The first step to getting a handle on early stage funding is to understand what funding opportunities are available within Maryland and then identifying which options are the right fit for a company.
To help in that regard, BioBuzz has compiled a quick early-stage funding cheat sheet for entrepreneurs and early-stage company leaders.
TEDCO Early-Stage Funds
The Maryland Technology Development Corporation (TEDCO), which recently announced its hire of Troy LeMaile-Stovall as its new CEO/Executive Director, has a long and storied history of funding emerging Maryland life science and technology companies.
In its 22 year history, TEDCO’s tech transfer, advisory and business programming and various funding programs have been a critical economic engine for the state of Maryland. According to TEDCO, the organization had helped deliver $1.6B of economic impact to the state as of 2018 and had supported the creation of approximately 7,800 jobs. A key driver of future economic growth is the successful launch and sustainability of startups and emerging tech and life science companies that are the lifeblood of Maryland’s economy.
TEDCO has a proven track record of supporting scores of promising startups and early-stage companies through the tech transfer, pre-seed, seed funding processes, helping them grown and prosper.
TEDCO’s Pre-Seed Builder Fund is a $1M annually distributed fund that provides financial and operational support to entrepreneurs that demonstrate a socially and economically disadvantaged background. These entrepreneurs often face obstacles in accessing more traditional capital and executive networks.
In July 2020, TEDCO announced that eight Maryland companies had received $450K in Builder Fund capital, including ClearMask LLC and Frederick, Maryland’s CarrTech, LLC, which is a graduate of the Frederick Innovative Technology Center (FITCI) incubator.
Applications for the Builder Fund are currently closed, but will open again in early 2021.
TEDCO’s Seed Fund is a $1M annually awarded fund that is designed to help early-stage, emerging Maryland companies overcome obstacles by leveraging TEDCO’s deep operational and investment experience. The Seed Fund invests in promising companies and investments can range from $100K to $500K. Most recently, in July 2020, the Seed Fund awarded approximately $800K to four Maryland startups, including ClearMask, LLC, Ardent Privacy, Ovalz, and Udynamix’s (dba iKeyVault).
The Seed Fund evaluates applications on a rolling basis. Interested entrepreneurs and early-stage organizations located in Maryland can apply here.
Established in 2006 as part of the Maryland Stem Cell Research Act, the Maryland Stem Cell Research Fund (MSCRF) promotes “…state-funded human stem cell research and medical treatments through grants to public and private entities in the state.” The MSCRF offers six funding programs for various organizations/individuals at varying stages of their development:
- Clinical and Post-doctoral Fellowships
The fund is designed to accelerate research and commercialization of human stem cell-based technologies. The MSCRF has played an important role in the BioHealth Capital Region (BHCR) becoming a thriving hub for personalized medicine, including cell and gene therapy companies, which has brought more advanced biomanufacturing capabilities into the state.
In 2020, The Maryland Stem Cell Research Commission (The Commission) announced $8.3M MSRCF grant awards across two funding rounds. MSCRF has awarded $157M in funding to BHCR companies seeking to accelerate stem cell research, therapies, and commercialization of products since 2007. RecentMSCRF funding recipients include Frederick, Maryland’s RoosterBio, Inc. and Theradaptive as well as Baltimore’s Neoprogen.
The MSCRF typically accepts and reviews applications during mid-January and mid-July application cycles. For more information on the different funding opportunities available, click here.
Maryland Venture Fund (MVF)
The MVF is an early-stage, TEDCO venture capital fund specifically dedicated to growing the next generation of innovative businesses in Maryland.
In addition to funding, they lend their considerable expertise to companies to help make the business successful. The MVF has more than $135M in assets under management, and has a team with deep venture and operations expertise, giving them the scope and experience to partner with exceptional entrepreneurs to build great companies.
The MVF is sector and industry agnostic, meaning it is a generalist fund that doesn’t focus on a particular field or market sector. The fund tends to make initial investments of approximately $750K in companies they believe have promise.
The website features a Send us your Pitch Deck link to help early-stage businesses move forward. As reported by BioBuzz in our recap of Q1/Q2 life science funding deals, the MVF most recently invested in Pathotrak, a food safety testing company located in College Park, Maryland, and ARMR Systems, a Maryland company focused on hemorrhagic control systems designed to increase survivability rates from battlefield trauma.
University of Maryland System’s (USM) Maryland Momentum Fund (MMF)
University of Maryland UM Venture’s Maryland Momentum Fund (MMF) is a $10M pre-seed to a late-seed investment fund that supports early-stage companies affiliated with the University System of Maryland (USM). The MMF provides investment funding for promising technology ventures that emerge from USM’s 12 institutions.
The MMF will typically make investments in $150K to $250K scope, up to a maximum of $500K. These investments are equity purchases or notes that are convertible into equity and are only made in USM-affiliated, Maryland-based companies.
The fund is led by Claire Broido Johnson, who was appointed managing director in June 2019 because of her deep experience building and managing successful companies and fixing struggling departments and organizations. Prior to joining the MMF, she was the founder of CBJ Energy, financing, operations, and business development energy solutions firm headquartered in Baltimore. She remains the active President of the firm.
To learn more about the MMF, companies should contact Lindsay Ryan, Venture Development Director, for more information or assistance. Companies can also apply here; applications are reviewed on a rolling, ongoing basis.
MCEDC offers early-stage companies a variety of important funding opportunities as part of its Business Funding and Incentives program.
SBIR/STTR Matching Grant Program Fund
For early-stage companies, non-dilutive fundings sources like the National Institutes of Health’s (NIH) SBIR and STTR programs are invaluable, as they not only help these companies develop and grow, but they also protect a young company’s ownership equity in their organization. MCEDC adds to these beneficial funding programs by offering emerging companies SBIR and STTR matching funds. For companies that agree to conduct 51% of their research and development in Montgomery County, Maryland, MCEDC will pay a 25% match for Phase I SBIR or STTR grants or up to $25K and a 25% match or up to $75K for Phase II grants.
The Phase II MCEDC matching program is currently closed but applications for the Phase I matching program are still being reviewed.
The Montgomery MOVE Program was created to encourage new businesses, including life science organizations, to open locations in Montgomery County, Maryland. Eligible businesses can receive a one-time grant upon signing a commercial lease in the county; the grant awards $8/square foot for commercial leases up to 20,000 square feet. The grant award is calculated based on a 10,000 square foot cap.
Companies need to apply here for funding within 90 days of signing a lease. The availability of funds varies based on demand and certain limitations apply.
The BioHealth Capital Fund, which was created by BioHealth Innovation Management (BHM), a subsidiary of BioHealth Innovation (BHI), is the newest early-stage funding opportunity for startups and emerging companies located in the BHCR.
BioHealth Innovation (BHI) was created in 2012 to accelerate the commercialization of high potential scientists, entrepreneurs, and companies within BHCR. Prior to BHI’s launch, the region’s development efforts were heavily focused on academic and government research assets. BHM is now taking the next step in its evolution by creating its BioHealth Capital Fund to support emerging companies with early-stage funding.
The BioHealth Capital Fund is seeking to close a funding gap for emerging companies in the $500K to $5M range. Rich Bendis, BHI’s Founder, President, and CEO, still sees a significant need for funding in this pre-seed, seed and Series-A niche despite significant improvement in this area due to Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) funding, angel investors and other early-stage funding programs at TEDCO and other similar organizations.
The BioHealth Capital Fund will look to invest in commercially relevant, scalable companies that have a market and a distinct advantage over the competition. The fund will invest in promising BHCR companies, as well as organizations from other regions in the U.S. and internationally.
The fund is currently in the process of closing the first $25M round of its $50M fund. Interested entrepreneurs and organizations should contact Andrea Alms, the fund’s Co-Manager, at firstname.lastname@example.org.
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