Auction will raise a minimum of $70M to invest in State’s start-up and early stage companies.
by Wanda Persons Wickham, DBED Marketing & Communications
Gearing up for the implementation in 2012 of the State’s InvestMaryland initiative, Grant Street Group, tax auction consultants, has been selected to oversee and administer the auction of the State’s premium tax credits to insurance companies operating in Maryland with the goal of raising a minimum of $70 million.
The funds will be invested into promising start-up and early stage companies in Maryland, creating the largest venture capital investment in the State’s history with the potential to generate 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. The tax credit auction will take place in March 2012 with a floor of $.70 on the dollar and a maximum of $100 million in tax credits as authorized by law.
“We are looking forward to working with a highly regarded firm like Grant Street Group to move InvestMaryland forward,” said DBED Secretary Christian S. Johansson. “A successful tax credit auction with the goal of raising a minimum of $70 million and hopefully more will help fuel the jobs and companies of tomorrow and create an economic climate where the most promising ideas and innovations have a chance to mature.”
Grant Street Group, www.grantstreet.com develops, hosts and administers customized software applications used by governments and financial institutions to support revenue collection and auctions of fixed income instruments, tax deeds and real estate. The company has over 3,100 government and financial clients and has been supplying hosted software as a service since 1997. Grant Street Group will work closely with the Maryland Venture Fund Authority, which was named earlier this year to oversee the administration of InvestMaryland.
The Maryland Venture Fund Authority will select venture capital firms that will invest 67 percent of the funds raised. Of the funds invested through private VC firms, 100 percent of the principal and 80 percent of the profits will be returned to the State’s general fund. The remaining funds – 33 percent – will be deposited into the State’s 15-year-old Maryland Venture Fund (MVF). 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 Maryland Small Business Development Financing Authority (MSBDFA) will also receive a portion of funds for investment.
Following the tax credit auction, the private venture capital firms will be able to begin making investments by mid-2012. Insurance companies will be able to claim tax credits beginning in 2015.