Harnessing Maryland’s Experienced Investors to Help TEDCO

Sometimes small changes hold the key to creating a better entrepreneurial environment.  That is why MTC has spent some time this month in Annapolis talking to legislators about a small but significant change to the State’s primary start-up funding entity, the Maryland Technology Development Corporation (TEDCO).

TEDCO was launched in 1998 to help commercialize the results of scientific research from higher education institutions, federal laboratories, and private sector organizations.  It is a quasi-public entity providing investments for early stage technology businesses.  It also funds technology business incubators.  TEDCO has a financial interest in over 400 Maryland companies.

Currently, the Maryland ethics law has a blanket prohibition on a State official having a financial interest in any entity that has a contract with the State.  This directly impacts TEDCO’s Board of Directors.  This provision makes it almost impossible for TEDCO to attract experienced angel investors and venture capitalists to their Board.  TEDCO needs these experienced Marylanders to direct their operations in order to keep TEDCO on track toward its objectives.  Since TEDCO is often the first outside funding a startup receives, Maryland investors on the Board are “walled off” from helping these companies later grow beyond their early stage.

Senate Bill 973 and House Bill 1073 make narrow changes to current Maryland law allowing Board members to still be subsequent investors in TEDCO companies.  They maintain other ethics protections including not allowing Board members to use their Board position to influence TEDCO investment decisions.