By Nick Sohr, Managing Editor, MDBIZNews
Grotech Ventures, a local venture capital firm, will invest $12 million on behalf of the state through the InvestMaryland program, the state announced Thursday.
Grotech is the first venture partner for InvestMaryland.
The Maryland Venture Fund Authority, which oversees InvestMaryland, tapped Grotech “because of its long history investing in early stage technology companies in Maryland and overall solid record of investment,” said authority Chairman Peter Greenleaf, who is also president of Gaithersburg-based MedImmune.
InvestMaryland, created in 2011 raised $84 million in March to invest in promising young Maryland companies in life sciences, cyber security, information technology, green energy and other targeted industries.
Private venture firms will invest two-thirds of that money, returning all of the principal and 80 percent of the profits on successful investments. The state will invest the rest.
Grotech’s $12 million is a little more than 20 percent of the $56 million that will eventually be disbursed to private venture firms.
“Through partners like Grotech and other venture firms that will invest these funds in the jobs of tomorrow, we continue to prove that Maryland remains on the cutting edge of innovation, and that our greatest assets are the talents, skills, creativity, ingenuity, and education of our people,” Gov. Martin O’Malley said.
Grotech was founded in 1984 and has operations in Maryland and Virginia. Its investment portfolio includes technology companies such as Advertising.com, Living Social, MicroProse, Zenoss and CDNow.
“Our goal with InvestMaryland is to plant the seeds for the next generation of innovative companies – the next Google, the next Microsoft – right here in Maryland,” said Christian Johansson, secretary of the Department of Business and Economic Development.
InvestMaryland builds on the success of the Maryland Venture Fund, which will receive most of the state’s share of the $84 million. The fund was seeded with $25 million 17 years ago and has made more than 100 investments, generating returns of more than $67 million, creating 2,000 jobs and spurring more than $1 billion follow-on private investment.
So far, four companies have received investments through InvestMaryland. Brainscope, of Bethesda, received $250,000 and Rockville-based Maxtena, $560,000. Two Baltimore companies, Bambeco and PathSensors, received $400,000 and $200,000, respectively.
InvestMaryland funds will also be awarded through the InvestMaryland Challege, a $425,000 business competition open to Maryland companies and others willing to move to the state. Through Tuesday, the Challenge had 156 applicants.
The state will give away three $100,000 prizes, one each in life sciences, IT and a general, open category. Entrants can also win $125,000 in in-kind business services.
Grotech Ventures was unable to comment due to legal restrictions on public statements during their fundraising period.