TEDCO Announces New Gap Funding for Startup Companies
COLUMBIA, Md. (April 20, 2017) – The Maryland Technology Development Corporation (TEDCO) today announced $1 million in new economic development funds that will provide startup technology companies with investment capital to help cover the gap between seed funding and venture capital investments. The Gap Investment Fund program, which was included in Governor Larry Hogan’s Fiscal Year 2018 budget, is being developed and administered by TEDCO.
“Technology startups often face funding challenges, particularly the critical period between receiving seed funding and being a mature enough company to attract venture capital,” said Governor Hogan. “This new program will bridge that funding gap, giving technology startups a much-needed lifeline as well as incentive to stay and grow in Maryland.”
TEDCO’s Seed Investment programs support approximately 50 companies per year – creating a funnel of companies that serve as a source of deal flow for the new Gap Investment Fund initiative. A Seed Investment of $100,000 can support a project that advances a technology toward commercialization. TEDCO’s later-stage fund, the Maryland Venture Fund, and other venture capital funds support companies further along in their development – often with significant revenues and complete management teams – that are raising investment rounds of more than $2 million. This established structure leaves a significant funding gap between the state’s seed investments and the investments made by institutional investors, such as venture capitalists.
“To help ensure that companies started in Maryland stay in Maryland, resources were needed to address the financing needs of growing companies, especially those that had already received investment through one of the State’s seed investment programs but are still vulnerable to leaving the State to receive their next round of funding,” said Newt Fowler, TEDCO Board Chair and business transactions partner of Womble Carlyle, LLP. “The Governor has provided a critical tool for building one of the nation’s leading technology clusters and TEDCO, which sees many of these companies at the seed investment stage, is well-equipped to administer the funding.”
TEDCO will now provide gap funding up to $500,000 to Maryland-based, technology companies to hire new employees for expansionary efforts such as scaling a product across markets and increasing market reach. These new funds must be used to hire additional employees and must be matched by other investments in the company.
“Startups generally require funding for their move from validating products to establishing a toe-hold in the market and generating revenues. This activity often falls in the gap between seed and venture investment, which usually requires a company to have revenues,” said John Wasilisin, president and chief operating officer of TEDCO. “TEDCO’s goal is to bridge this funding gap and help build successful companies to spur economic development in Maryland.”
More information on the new Gap Investment Fund can be found at www.tedco.md/programs.
The Maryland Technology Development Corporation (TEDCO) is the go-to source for entrepreneurial support and guidance for startups and early-stage companies engaged in bringing innovative ideas to market. For over eighteen years, the organization has provided funding, mentoring and networking opportunities to support Maryland’s innovation ecosystem. It is frequently ranked as one of the most active seed/early-stage investors in the nation. The organization plays a key role in bringing research created in Maryland’s educational institutions and federal laboratories into the commercial marketplace. For more information about TEDCO and its programs and resources, visit www.TEDCO.md.
###
Media Contact:
Tammi L. Thomas
410-715-4162
tthomas@tedco.md
