Grotech Ventures Selected as First InvestMaryland Venture Capital Firm

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Grotech Ventures – a Mid-Atlantic venture capital firm – has been selected as the first private venture firm to receive funds to invest through Maryland's $84 million InvestMaryland program.

Grotech Ventures – a Mid-Atlantic venture capital firm – has been selected as the first private venture firm to receive funds to invest through Maryland's $84 million InvestMaryland program. As part of the agreement, Grotech Ventures will have $12 million to invest in promising early-stage companies and, if successful, 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 look forward to working with a high-caliber firm like Grotech Ventures to strengthen Maryland’s Innovation Economy,” said Governor O’Malley. “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.”

“The Maryland Venture Fund Authority, in partnership with the Department of Business and Economic Development, selected Grotech because of its long history investing in early-stage technology companies in Maryland and overall solid record of investment,” said Greenleaf, who is also President of Gaithersburg-based MedImmune. “The State’s investments through InvestMaryland will help attract significant follow-on capital from the private sector, create well-paying jobs and support a wide range of companies in biotechnology, information technology, green energy and other targeted industries.”

“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 Department of Business and Economic Development Secretary Christian S. Johansson. “Maryland is fortunate to have a highly-educated workforce and is a nationally recognized center for research and development. InvestMaryland helps us build on those key assets by providing the critical ingredient of venture capital funding.”

Grotech Ventures is unable to comment due to legal restrictions on public statements during their fundraising period. Founded in 1984, Grotech Ventures is a leading early investor in high-potential technology companies. Grotech seeks innovative IT companies with particular emphasis on digital and social media; software and SaaS; security and storage technologies; healthcare information technology; and communications technology and services. Grotech supports early-stage companies through investments starting at $500,000.

InvestMaryland is the largest venture capital investment in history by the State. The program is being implemented through the Venture Fund Authority and the Maryland Department of Business and Economic Development (DBED). Earlier this year, $84 million was raised for the program through an online auction of premium tax credits to insurance companies with operations in Maryland. Of that funding, two-thirds will be managed by private venture firms, like Grotech. The remaining third is being invested by the state-run Maryland Venture Fund (MVF). The MVF was seeded with $25 million and over its 17-year existence invested in hundreds of start-up and early stage technology and life sciences companies, generating a $67 million return, 2000 jobs and more than $1 billion in private investment. Returns on the funds invested through the MVF are reinvested in the program.

In September, the program made its first investment, through the Maryland Venture Fund, of $250,000 to Bethesda-based Brainscope. Earlier this month, the State announced additional investments totaling $1.1 million: Rockville-based Maxtena received a $560,000 investment, and two Baltimore companies – Bambeco and PathSensors – received investments of $400,000 and $200,000, respectively. And, through the Venture Fund, the State has made several follow-on investments in companies, including Zenoss, an Annapolis-based IT company that received $148,000 and Theranostics Health Inc., a biotechnology company in Gaithersburg that received $250,000.

Key tenets of InvestMaryland have been implemented over the past 18 months. In August 2011, the Governor named the Venture Fund Authority, a nine-member panel that oversees the administration and operation of the program. Earlier this year, the Authority selected Grant Street Group to prepare for and run the tax credit auction and selected Altius Associates, a London-based firm, to oversee the selection of private venture firms to invest InvestMaryland funds.

To help build a pipeline of companies for potential investment through the program, Governor O’Malley launched the InvestMaryland Challenge, a national business competition that gives seed and early-stage companies a unique opportunity to win $300,000 in grant awards. The Challenge will award a $100,000 top prize in each of three categories: life sciences; IT (hardware and software); and general business. In addition, applicants will have the opportunity to connect with top venture capital firms and angel investors. The Challenge will also award $125,000 in in-kind business services, including legal services, software development assistance, biomedical consulting and free incubator space. Applications are being accepted now through December 13, with winners announced in the spring. For more information or to apply, visit http://www.investmarylandchallenge.org

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Karen Glenn Hood
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