Archives For Maryland Venture Fund

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Motionsoft’s management software provides solutions for the wellness industry. Photo courtesy of Motionsoft.

The Maryland Venture Fund (MVF) has invested $600,000 in Rockville-based Motionsoft, a leading provider of management software to gyms and fitness clubs.

The investment comes as part of a $10 million Series B investment round led by Route 66 Ventures and included Edison Ventures as a co-investor. The State of Maryland’s investment is part of a multifaceted effort led by Governor Martin O’Malley to stimulate growth and job creation among high-tech startup companies in Maryland.

“Today’s investment is part of our focus on innovation — we are committed to supporting our entrepreneurs, innovators, startup companies and small businesses like Motionsoft because, in addition to being the future leaders of our economy, they are creating the jobs of today and tomorrow,” said Governor O’Malley.

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Sitting down and having a conversation with a person, face to face, it tends to be fairly obvious if a person is feeling satisfied or frustrated, and whether a statement has real significance or is simply a passing observation.

But when communication is reduced to a quick online exchange in the form of a Facebook post, a tweet or a review, understanding significance and emotional context can be incredibly difficult, even more so for companies and organizations that process hundreds or even thousands of these feedback messages per day.

Synapsify, a technology company based in Bethesda, Maryland has a solution. The company has developed a unique tool for interpreting and prioritizing text and making analytical recommendations. It goes beyond categorizing positive, negative and neutral sentiment. Instead, it qualitatively scores and indexes text and patterns in terms of relevance, narrative and underlying thematic concepts.

The company’s innovative approach to managing feedback has attracted national media attention. Forbes named Synapsify one of the Top 10 Data Startups to Watch in 2013 and Gigaom awarded the company its Structure Award for Text Analytics.

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Salsa Labs

Salsa Labs

Salsa Labs, a marketing software provider for nonprofit organizations and social and political campaigns, has received the largest-ever investment from the State-run Maryland Venture Fund. The Maryland Department of Business and Economic Development (DBED) announced the $1 million investment on Thursday. Edison Ventures, an information technology investor, led the $5 million round.

Company officials have committed to moving Salsa Labs and its 50 employees to Maryland, from its current offices in Virginia and Washington, D.C. Founded in 2004, the software serves more than than 2,000 organizations and 15,000 campaign managers. Nonprofit clients, ranging from the Sunlight Foundation to Aid for Africa, have raised more than $280 million and driven more than 36 million actions online.

“Online engagement is key to a nonprofit’s long-term success, and we have built a comprehensive, easy-to-use solution focused on enhancing how the nonprofit organization connects with its donors and activists,” Salsa Labs CEO Scott Stouffer said in a statement. “With this funding, we will continue to invest in supporter-centric product innovation that furthers our clients’ missions.”

“We are proud to make the largest-ever Maryland Venture Fund investment in Salsa as they bring their cutting-edge technology and exciting growth to Maryland,” DBED Secretary Dominick Murray said in a statement. “High-tech and innovative companies like Salsa are critical for the health of Maryland’s vibrant Innovation Economy, and we are committed to support them as they expand and create family-sustaining jobs.”

The Maryland Venture Fund has invested $100,000 in Bethesda-based BioDatomics, the Maryland Department of Business and Economic Development announced Tuesday.

BioDatomics is revolutionizing genomic research through bioinformatics analysis software and services. The company’s flagship product BioDT reduces turnaround times for analysis of genomic data from days or weeks to mere hours.

“The Maryland Venture Fund is a regionally recognized investment leader able to provide us with significant value beyond its financial investment,” Alan Taffel, president of BioDatomics, said in a statement. “As the need for faster, more intuitive data analysis platforms grows, this commitment serves as a testament to the strength of our technology and market strategy.”

DBED Secretary Dominick Murray said he is looking forward to BioDatomics’ expansion in Maryland and reaffirmed the state’s commitment to entrepreneurship.

“BioDatomics operates at the intersection of two of Maryland’s fastest-growing sectors—biotechnology and big data. We are proud to make this investment in BioDatomics and look forward to their growth and success in Maryland,” Secretary Murray said in a statement. “Supporting entrepreneurs and small businesses in high-tech, high-growth fields is critical to the success of our economy and State. Companies like BioDatomics are facilitating the development of cutting-edge medicines, vaccines and technologies that keep us safer, healthier and better-connected than ever before.”

Find additional information on the Maryland Venture Fund and BioDatomics in the full announcement through the Maryland Department of Business and Economic Development.

The second annual InvestMaryland Challenge is in full swing. If your business is in need of a jump start, check out this site for more information about the national business competition. The Challenge offers applicants free admission to networking events, social media promotion, scoring and feedback from judges, exposure to venture capital firms and angel investors and the chance to compete for more than $600,000 in prizes. Winners of the Life Sciences, IT, Cybersecurity and General Industry categories will each win $100,000 awards. Others will take home smaller grants, incubator space, consulting services and other cash and in-kind prizes. Applications are due by Dec. 6.

Judges include a distinguished lineup of industry leaders and experts in a variety of fields. Meet a selection of judges below.

Meet The Judges:

IT-robDoub

ROBB DOUB

Robb Doub joined New Markets Venture Partners in 2003. Robb is the lead administrative partner and serves as a board director for eCoast Sales Solutions and Appfluent Technology, and is lead partner or board observer for K2 Global, Kroll Bond Ratings, Navtrak, Three Stage Media, CSA Medical and TidalTV. He also serves on the board of Egeen International and the Conflicts Advisory Board of the off-shore hedge funds.

IT-daphneDufresneDAPHNE DUFRESNE

Daphne Dufresne joined RLJ Equity Partners from Parish Capital Advisors, where she was a Venture Partner managing the direct investment and co-investment program. Formerly, Ms. Dufresne was a Principal at Weston Presidio Capital with $3.4 billion of assets under management. She also served as Associate Director in the Bank of Scotland’s Structured Finance Group. Ms. Dufresne received her B.S. from the University of Pennsylvania and her M.B.A. from Harvard Business School.

LS_Christy_W_WyskielCHRISTY WILLIAMS WYSKIEL

Christy Williams Wyskiel is an entrepreneur and investor with 20 years of experience focused on the life sciences and healthcare industries. Previously, Christy was Managing Director at Maverick Capital, an equity hedge fund with $12 billion under management. She co-founded GrayBug, an ophthalmic drug-delivery company. In 2012, Christy joined the Johns Hopkins Alliance, a board charged with evaluating the commercial viability of research projects at JHU.

CS_Frederick_FerrerFREDERICK J. FERRER

Frederick J. Ferrer has over three decades of experience in the National Security, Intelligence Community (IC), Homeland Defense and Cyber. Mr. Ferrer holds a Master’s of Science in Strategic Intelligence from the National Intelligence University and serves in a number of leadership capacities, including the Maryland Commission on Cybersecurity Innovation and Excellence; National STEM Consortium Advisory Committee; and Chesapeake Regional Tech Council.

GEN_Deb_TillettDEBORAH TILLETT

As the Executive Director and President of the Emerging Technology Center in Baltimore, Ms. Tillett is responsible for management of budgetary, administrative, programmatic functions and strategic planning. Prior to joining ETC, Ms. Tillett served as president and co-founder of Immersive 3D, LLC, a technology start-up providing web-based 3D computer gaming solutions for K-20 education and offering contract-based technology services.

See the full list of judges and submit your application on InvestMarylandChallenge.org.

Optoro—a Lanham-based startup specializing in reselling items that have been returned to major retailers—is flexing its fundraising muscles.

Technically Baltimore reports that the 5-year-old company has raised $23.5 million in equity, based on its latest U.S. Securities and Exchange Commission filings.

The company’s innovative approach to asset recovery has attracted multiple investors. In 2010 and 2011, the Maryland Department of Business and Economic Development invested $200,000 in Optoro through the Maryland Venture FundTed Leonsis, a world-renowned entrepreneur and owner of the Washington Capitals, the Washington Wizards, the Washington Mystics and the Verizon Center, has actively invested in the company and serves as a director. Lawson DeVries of Grotech Ventures is another active investor and director. Grotech Ventures, in 2012, was chosen as the state’s first InvestMaryland venture capital firm. Its Hunt Valley office was awarded $12 million to invest in Maryland startups.

Co-founder and CEO Tobin Moore sat down with MD BIZ News in February 2012 to discuss plans for expansion. At the time, it was focused almost exclusively on buying returned goods from Walmart, Best Buy, Staples and other retailers, and reselling them on websites like Amazon and eBay.

The company has since further developed OptiTurn, cloud-based inventory management software that allows the company to “simultaneously post inventory of all categories and conditions across the most popular online marketplaces, instantly connecting our clients’ products to the hundreds of millions of secondary buyers regularly searching for them,” according to its website. Moore said he believes the software is a major step toward growing the startup into a $500 million company.

Watch MD BIZ News’ interview with Moore below:

News Release:

Governor Martin O’Malley and Peter Greenleaf, chairman of the Maryland Venture Fund Authority (MVFA), announced that New Atlantic Ventures and Kinetic Ventures have been selected to receive funds through the State’s $84 million InvestMaryland program. New Atlantic will receive $8 million and Kinetic will receive $5 million to invest in innovative early-stage businesses in the State. As part of the agreement, the firms, if successful with investments, will return 100 percent of the principal and 80 percent of the profits to the State’s general fund.

Created by Governor O’Malley and passed by the Maryland General Assembly in 2011, InvestMaryland is an historic initiative to fuel Maryland’s Innovation Economy, support entrepreneurs and stimulate the economy and job creation.

“We are excited to bring New Atlantic and Kinetic on board as partners in InvestMaryland,” said Governor O’Malley. “This critical program leverages the capital and expertise of the private sector to ensure that our early-stage companies get the funding they need to further discoveries that feed, fuel and heal our world.”

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By Nick Sohr, Managing Editor, MDBIZNews

Johns Hopkins University and Fraunhofer Heinrich Hertz Institute of Berlin inked a deal last month to jointly develop technology that could reduce the time and money required to perform a wide range of medical tests.

The international collaboration between the major research institutions will investigate the potential medical applications of integrated optical sensors — small, highly sensitive devices that researchers say can recognize diseases.

Researchers hope the sensors will make testing cheaper and quicker. That, in turn, would make testing available to broader populations and treatments more targeted, which could cut down on the spread of drug-resistant strains of diseases.

But, while the technology holds promise, Fraunhofer and Hopkins need more.

Their work would linger on the lab bench without the timely injections of capital that move innovations from the drawing board to the marketplace.

Maryland Department of Business and Economic Development Secretary Christian Johansson met with the partners shortly after the collaboration agreement was signed at the BIO International Conference.

“They said ‘What can you do to help?’” Johansson said, recounting the meeting.

“We were able to have a conversation and for the first time really be able to say ‘We have a pathway of capital to get you to a place where you can turn this into a company where you can raise more private capital, where you can actually have a product,’” Johansson said. “In the past, what we could do to help was, frankly, very limited. We certainly didn’t have readily available tools to help new technologies that weren’t ready for seed financing yet.”

As a first step, Johansson suggested applying for the Innovate Maryland program, an initiative of Gov. Martin O’Malley approved by the General Assembly this year.

A partnership between the state and public and private research universities, including Hopkins, Innovate Maryland is designed to commercialize 40 discoveries a year by providing funding for prototypes and other proof-of-concept work.

Innovate Maryland should catapult worthy ideas to the level where InvestMaryland can take notice. Another O’Malley priority, InvestMaryland, was created in 2010 and seeded this year with $84 million raised in a first-of-its-kind tax credit auction.

Together, InvestMaryland and Innovate Maryland were cited by the U.S. Chamber of Commerce when it ranked Maryland No. 1 for innovation and entrepreneurship last month.

DBED’s Maryland Venture Fund will invest about one-third of the InvestMaryland money in seed-, early and growth-stage companies and private venture firms will invest the rest of the money on behalf of the state in early and growth-stage businesses.

A company could receive a Maryland Venture Fund investment, grow, prove successful and later catch the eye of a venture fund investing more of the state’s dollars.

The first investments will likely be made this summer.

“There’s a continuum of capital and opportunity that didn’t exist before,” Johansson said. “We’ve built a runway that can take a project from an innovation occurring in our universities through commercialization to company formation and job creation. That is something that didn’t exist before we got here. It’s practical. It’s happening. It’s not science fiction anymore.”

Chuck Cullen is a general partner at Grotech Ventures, as well as the firm’s chief financial officer. Founded in 1984, Grotech has focused its venture capital investments on early stage information technology companies, including major mid-Atlantic names like Advertising.com and LivingSocial. Cullen sat down with MDbizMedia recently for a Q&A on the landscape of Maryland venture capital.

Chuck Cullen

Why did the firm decide to focus on early stage IT?

“Venture has always been a core strength for us. We really liked the market dynamics of the early stage landscape, so we played on our strengths and our history and our expertise. And we saw some weaknesses and challenges in those later-stage markets, specifically lots of capital flowing into those markets, prices that were being paid for investments that were oftentimes inflated and significant use of leverage in deals that were being closed at that time.”

So there was space in the early stage market? There’s a lack of supply that you saw, in terms of capital?

“There is. And there’s an opportunity for us to leverage our relationships, our networks to find the best deals, to support those deals through the growth phases and to continue on with the success that we’ve had over these 28 years.”

It’s often said there’s a gulf in the state between innovation and commercialization. Do you agree with that?

“It has been a challenge and it will continue to be a challenge going forward, particularly if the end goal is to produce public companies, or large, sustainable companies around these technologies. It takes the right resources – the money, the human capital, the technology, the markets and timing – to all come together to make that happen.”

Why is that going to remain a challenge?

“Well, capital is hard to come by. Early stage capital is hard to find. Markets are competitive and very dynamic. You need to have an ecosystem that supports these companies. There are certain areas of the country where there are very dynamic ecosystems for early stage companies. You know, Boston or Silicon Valley, where there’s a very strong network and ecosystem and a network of universities that produce technology and then are very effective at taking that technology, rolling it out and commercializing it.”

Why aren’t you in Silicon Valley or Boston? Why is the company here?

“This is a terrific area in terms of the history of technology companies that have grown out of this area. We have many examples of successful companies that were grown in this region. We have found fertile ground here.”

Is the ecosystem getting better here?

“There are some headwinds that I think our markets face. It is a challenge to find early stage capital that will support a wide range of opportunities. Some of this comes down to a law of large numbers as well, and putting those resources into a large number of ideas, seeing how the market reacts to those ideas, and taking those ideas to the next level. The state of Maryland has systems in place to help commercialize these technologies. We have a very vibrant incubator system. But until we can look back and we can say that we’ve produced “X” number of companies that have emerged and been successful, the jury is still out. State programs, like the InvestMaryland program, are very helpful. We need more programs like this.”

Can Maryland have that sort of ecosystem you were talking about?

“Absolutely. I would also say that more generally, in the mid-Atlantic. There’s a Maryland component, but there’s also Northern Virginia, and the District of Columbia has become very active.”

What impact do Maryland’s federal, medical and academic institutions have on the start-ups here?

“We have a great pool of talent to pull from. We have predecessor technology companies that have been successful. I look at company like Zenoss, based in Annapolis, led by an executive with previous experience from cloud computing pioneers, Digex and USinternetworking — both Maryland-based — and the executive talent flowing from Advertising.com as good examples.  Having an ecosystem of previously successful entrepreneurs knowing what it takes to grow these companies is really critical. Leveraging this talent pool, as well as top-notch federal, medical and academic institutions and government programs to support the ecosystem has a compounding effect.  One further example comes from Howard County, where there has been leadership to build the best public fiberoptic network with cutting-edge technology that can be used to test next-generation applications.  This is the sort of leadership we need to make the most of the opportunity provided.

What else are you excited about in Maryland?

“I understand that several traditional incubators are adopting more of an “accelerator” approach.  That’s important. One other thing I’ve seen here locally is that it appears that there’s a next generation of start-up, super angel groups that are out there. There are individuals who are working to aggregate angel investors and high-net-worth individuals who can come in, work closely with these fledgling companies, and provide capital to start-up entities. In addition, capitalizing on the government’s research spending, in areas like cyber security, will continue to help the ecosystem.”

By Nick Sohr, Managing Editor, MDbizMedia

From a whirring hard drive in Tom Murdock’s living room in Timonium grew Moodlerooms, Inc.

The spinning drive told Murdock, then a high school English teacher, his students were logging in online to turn in assignments, read Murdock’s feedback and communicate with their instructor.

That experiment with a platform called Moodle blossomed into Moodlerooms, a Baltimore tech company with 85 employees, 1,000 clients across the country and a million end users.

“Our growth is explosive,” said Murdock, the co-founder and president of Moodlerooms.

The company supports the e-learning software that schools, universities and businesses use, and adds its own innovations in assessment, content management, interactivity and other areas on top of the open-source Moodle platform. Moodlerooms developers have also been working on a new product the company plans to roll out soon.

“I think we’ve succeeded in creating a whole new category of product, something that nobody else offers,” Murdock said. “We’re really thrilled about introducing that in the next couple months.”

Lou Pugliese, the company’s chairman and CEO, said the product “completely reinvents” e-learning design.

“E-learning and learning management systems are really only about 12 years old, but it’s the fastest growing technology in the history of education, quite frankly,” Pugliese said. “It’s very different now than when we built it in the late ‘90s. Educators and schools are looking for new types of applications. They’re looking for different designs.”

Moodlerooms was founded in 2005 after Murdock found himself running e-learning programs for other teachers, too.

Moodlerooms moved to Federal Hill two years ago.

Two years ago, Moodlerooms moved from the Emerging Technology Center to offices in Federal Hill, where most of the company’s 85 employees work. The Department of Business and Economic Development has invested $1.2 million in the company through the Maryland Venture Fund in the last six years.

Pugliese said he expects the staff to grow to 150 by the end of next year.

Moodle is the largest e-learning platform in the world, with a presence in more than 200 countries and 55 million end users. Moodlerooms is the platform’s largest service provider.

“Most institutions, higher ed and K-12, are looking to get into the open-source environment,” said Pugliese. “They’re looking to move off of proprietary platforms.”

The growth also reflects broader changes in technology that have put smartphones in students’ pockets and electronic communication tools, like social networking sites, on their screens. E-learning software allows educators to tailor instruction more closely to students’ needs while delivering the information in the mode to which students have become accustomed.

“It’s very difficult to reach an individual student. Every student learns differently. In a textbook classroom environment, it’s one size fits all. You either make it and understand it or you don’t,” said Pugliese. “What e-learning and digital content allows you to do is to redirect specific remediation activities to a student that doesn’t have the same kind of skill and competency that somebody else might have.”

InvestMaryland raised $84 million on Thursday to invest in small, high-tech Maryland businesses. Afterward, Christian Johansson, secretary of the Department of Business and Economic Development, and Peter Greenleaf, president of MedImmune and chairman of the Maryland Venture Fund Authority, shared their thoughts on the highly successful auction and what’s next for the state-funded venture capital effort.

By Nick Sohr, Managing Editor, MDbizMedia

The state raised $84 million Thursday to fuel InvestMaryland, the largest state-funded venture capital program effort in the Maryland’s history.

The money will be invested in young, high-tech companies in some of the most innovative sectors in Maryland, including the life sciences, information technology and green energy.

“Today was a huge haul for InvestMaryland,” said Christian Johansson, secretary of the Department of Business and Economic Development. “This is a big day for entrepreneurs. This is a big day for Maryland.”

Maryland Venture Fund Authority members and staffers watch the results of a tax credit auction to fund the InvestMaryland venture capital program.

One-third of the money raised, or $28 million, will go to the state’s Maryland Venture Fund and two-thirds, $56 million, will be allocated to private venture capital firms to be invested in high-tech Maryland companies.

On successful investments by private venture firms, Maryland will recoup all of the principal and 80 percent of the profits.

The expected benefits, however, go beyond those returns.

“The last time we [seeded the Maryland Venture Fund], we only invested $25 million,” Johansson said. “That $25 million returned $61 million to taxpayers. On top of that, it created 2,000 jobs.”

(Companies that have benefited from Maryland Venture Fund investments include A&G Pharmaceutical Inc., Bambeco and Optoro Inc.)

Peter Greenleaf, president of Gaithersburg-based MedImmune and chairman of the Maryland Venture Fund Authority, which oversees InvestMaryland, said the “infusion of capital is going to make a real difference for companies in the state of Maryland.”

“The hunger and need for capital out there, all the way from seed level, all the way through the later-stage development companies is very, very high,” Greenleaf said. “The current economic environment, the economic environment over the last five years, has been toughest in some cases on some of our smaller, entrepreneurial companies.”

InvestMaryland, Gov. Martin O’Malley’s top economic proposal in 2011, was approved by the General Assembly last April. The legislation authorized the venture authority to auction off $100 million in tax credits to insurance companies and to use the proceeds to fuel the venture capital program.

Unsure of the appetite insurance companies would have for the credits, members of the venture fund authority only had to wait four minutes on Thursday.

The auction launched at 11 a.m. and by 11:04, insurance companies had bid on all $100 million in credits, most of them at the price floor of 70 cents on the dollar.

Then the price started to climb.

By 11:25, the price was 80 cents on the dollar and crept higher, even as bidding slowed.

The auction was extended by more than 12 minutes as insurance companies sought to clear the threshold and claim some of the credits.

In the end, 24 bidders made 47 bids. The final price: 84 cents on the dollar. The haul: $84 million for InvestMaryland.

Maryland was the first state to fill a venture capital fund by auctioning tax credits, Johansson said.

“If we would have gone with other approaches, we would have raised $14 million less, at a minimum,” he said.

DBED will solicit proposals from venture capital firms interested in participating in the program starting March 20.

The authority will recommend venture firms to the department in May. The allocations of investment capital to venture firms and the first investments will be made in June.