Donald Fry: ‘Invest Maryland’ outcome will gauge depth of state commitment to early-stage funding

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By Donald C. Fry

Last Tuesday, the House Ways and Means Committee sent a pared-down and amended Invest Maryland bill, HB 173/SB 180 to the House floor. As of Thursday afternoon, the House had preliminarily approved the amended version of the bill, keeping one of the top legislative priorities of the O'Malley administration alive entering the final weekend of this year's regular session.

Final House passage is expected on Friday, after which the legislation, supported by a cadre of business advocates, will go to the Senate Budget and Taxation Committee, where it faces more potential amendments.

Governor O’Malley’s Invest Maryland proposal would sell discounted tax credits to insurance companies and use the proceeds to invest in emerging bioscience and technology companies located in Maryland. A major purpose of the bill is to generate a significant pool of funding from the private sector to invest in companies that are in the early stages of building businesses stemming from research performed at universities and research labs in our state.

The House Ways and Means Committee's amendments would cut back the amount of tax credits the state could sell, which would reduce the amount of privately-funded investment capital ultimately raised to approximately $75 million -- $25 million less than in the original legislation.

Other amendments would reduce to one-third the amount of funds the legislation would make available for investment in early-stage companies through the Department of Business and Economic Development. Two thirds would be invested in emerging companies through private venture capital firms, which tend to favor companies that are largely beyond the early stage of development. The original bill would have focused at least 50 percent of investment funding on early-stage companies.

Compared to other states that are aggressively nurturing growth of their bioscience and technology industry sectors, Maryland lags behind in available early-stage financing, industry experts told lawmakers during February hearings on the Invest Maryland bills.

That’s a significant economic development shortcoming for a state so abundant in research and innovative ideas percolating from within the plethora of major research institutions located here.

A new generation of entrepreneurs is emerging here. But experts report that our state is significantly short of capital to get emerging companies through the "valley of death," the in-between stage at which entrepreneurs have exhausted most initial start-up investments from friends and angel investors, but need funds to get their new companies to a more developed stage that will attract more investment.

It’s considered likely that lawmakers will pass some kind of Invest Maryland legislation – probably on Monday, the last day of the session. But what form the legislation will take after a weekend of compromise and bargaining by members of House and Senate fiscal committees is anybody’s guess.

Members of the Senate Budget and Taxation Committee may seek to tinker with the way the investment capital for the fund would be raised. During February hearings on the bill, several committee members questioned the concept of selling tax credits at a discount.

They questioned why the state shouldn't just directly earmark funds to invest into emerging companies. If lawmakers decide to pursue such an option, it would mark a significant change in the state's biotech and technology funding strategy, which currently relies largely on leveraging tax credits into generating private-sector investment in emerging technology companies.

For lawmakers seeking to arrive at a consensus on Invest Maryland over the weekend, the bottom-line issue is whether, and to what degree, the state will commit to investing in early-stage companies. It's a high-risk proposition, but early-stage funding is critical to converting Maryland's wealth of research into bioscience and technology industry growth.

In any case, we'll know the answer on Tuesday.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Previous Center Maryland columns by Donald C. Fry:

How does General Assembly measure up to core pillars of job creation?

Maryland’s jobs recovery is under way, but it’s sluggish

Maryland’s bioscience and technology industries are well worth nurturing

Maybe it’s time to change Maryland’s transportation funding model

Addressing the city’s towing kickback scandal head-on

Transportation funding bills get attention in Annapolis, but face major hurdles

Tapping into Maryland’s potential for innovation

A 23-year old leadership lesson from the Persian Gulf

Gauging the business contribution to state government funding

How the state lost its way on transportation funding

Budget proposal will be first big 2011 defining moment for lawmakers

GBC to lawmakers: ‘Make job creation and business growth top session priority’

Helping city’s new prosecutor implement a vision

A culture of ‘giving back’ lives in Maryland’s business community

Budget challenges will test government’s capacity for strategic planning

Facing the disconnect over the concept of ‘business climate’

Tax commission delivers refreshing change of pace

‘Reform’ commission to mull tax increase for Maryland corporations

No tsunami in Maryland, but voters deliver ripple of transition

Why isn’t transportation infrastructure crisis on lawmakers’ radar?

Market expert tells a pre-Halloween scary story

Entrepreneurs provide inspiration in a recession

Military is driving Maryland’s anticipated biggest economic spurt in 60 years

MedImmune CEO frames bright future for bioscience

Making transportation a top-tier priority

Primary voters in a mood for transition

Reading Maryland's fiscal tea leaves

Getting beyond sound bites and bumper stickers

Biotech tax credit more popular than ever, but the ‘rock-concert’ lines are gone

Bad timing for upcoming business tax report

For economic indicators, the ‘whipsaw’ effect continues

Do census data foretell a Baltimore city population rebound?

Remember the value of business after the election

New report ranks Baltimore among stronger regions to weather the recession

New living wage proposal: wrong idea, wrong time for Baltimore

Northeast needs more attention from federal rail planners

New national report has familiar ring for Maryland bioscience advocates

New report underscores Maryland’s work force development challenges

State’s health initiative: a ‘win-win’ for employers and their workforces

As Baltimore hikes taxes, are state’s counties next?

After the ‘fiber from heaven’ scramble, what’s next?

BRAC growth no longer a future event – it’s happening now

Economic development is a contact sport

Despite the recession, bioscience growth still percolates in Baltimore

State stumbles in enacting new education collective bargaining process

Wind power has potential in Maryland, but solar emerges as early renewable option

It's not good to be clueless in cyberspace

Amid fiscal shuffle, Maryland lawmakers pass measures to spur business growth

Thankfully, Baltimore leads with substance over style in luring Google

Leave damaging transportation provisions out of the budget

Amended budget continues recession-induced fund shifts and stimulus rescue

General Assembly setting stage for combined reporting push in 2011

Wrong timing for proposal to change Baltimore City school board

Baltimore City isn’t alone in facing pension funding challenges

A government investment program that delivers

Proposed transportation fund raid -- a bad habit continues

Where's the outrage over crime?

Small business is where innovation lives
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Donald C. Fry has been the president and CEO of the Greater Baltimore Committee (GBC), the central Maryland region's most prominent organization of business and civic leaders, since November 2002.


Under Don’s leadership, the GBC is recognized as a knowledgeable and highly credible business voice in the Baltimore region, Annapolis and Washington, D.C. on policy issues and competitive challenges facing Maryland. Its mission is to apply private-sector leadership to strengthening the business climate and quality of life in the region and state.


Fry served as GBC executive vice president from 1999 to 2002. From 1980 to 1999 Fry was engaged in a private law practice in Harford County. During this time he also served in the Maryland General Assembly. He is one of only a handful of legislators to have served on each of the major budget committees of the General Assembly.


Serving in the Senate of Maryland from 1997 to 1998, Fry was a member of the Budget and Taxation Committee. As a member of the House of Delegates from 1991 to 1997 Fry served on the Ways and Means Committee and on the Appropriations Committee.


Fry is a 1979 graduate of the University of Baltimore School of Law. He earned a B.S. in political science from Frostburg State College.