ANNAPOLIS — All but a few million dollars of state money for startup companies should soon be awarded to private venture firm, now that Gov. Martin O’Malley has signed legislation that makes immediate, critical changes to the $84 million InvestMaryland program.
Senate Bill 70 — an emergency bill that went into effect the moment O’Malley lifted his pen from paper on Thursday — relaxes some restrictions and makes technical changes to the state’s signature venture capital program. The changes are expected to help attract interest from private venture firms, some of which had balked at taking money from the program.
With the changes, four venture capital firms — which were waiting for SB 70 to become law — should soon receive money from the state. Another firm is expected to be approved this month, said Thomas S. Dann, managing director of the Maryland Venture Fund.
“What it did was remove potential roadblocks,” Dann said Thursday.
Some firms had been concerned about the state’s requirement that they invest money in companies operating in Maryland, because that could force them to bend their business plan, making investments that they might not otherwise.
To solve that problem, the firms proposed creating a “sidecar fund” in which the state would put its money. SB 70 authorizes the state to invest in such a fund.
Private firms selected by the state are supposed to invest $56 million of the total $84 million InvestMaryland fund, with the state investing the remainder. The money was raised through an online auction of insurance premium tax credits in March 2012. Ten companies with operations in Maryland bid on the credits, which will become available in 2015.
The Department of Business and Economic Development estimates that investments will ultimately be made in 40 to 80 companies a year. State investments will be made in startup firms where there is more risk, while the private venture capitalists will target more mature, early and growth-stage companies.
With the changes, Dann said he expected all but about $5 million of the $56 million allocation for private firms to be awarded to private venture funds this summer. The changes couldn’t come soon enough, he said.
“My request was for the first [bill] signing,” Dann said. “There’s been no negative impact from the delay.”
The bill came under fire in the final days of the General Assembly when some Republicans in the House of Delegates criticized InvestMaryland, saying it was a bad sign the program — created during the 2011 legislative session — already needed tweaks in order to be successful.
Dominick E. Murray, DBED secretary, said InvestMaryland would now be able to operate as originally intended.
“You want to make it easy for us to make these investments,” Murray said. “It’s an important program for us to help small businesses, startups.”
Hundreds of other bills were also signed into law Thursday during the third ceremonial signing since the legislature adjourned its annual 90-day session. Included on the lengthy list was a new $2 million credit for investors in cybersecurity companies, an expansion of early voting, a law redirecting some gas tax revenue to the Waterway Improvement Fund while capping the vessel excise tax and a measure authorizing a medical marijuana program.
“There’s all sort of opportunity on the horizon,” O’Malley said.
The day’s headliner was legislation that repealed Maryland’s death penalty. With hundreds of supporters in attendance, O’Malley — seated between Senate President Thomas V. Mike Miller Jr. and House Speaker Michael E. Busch — signed that bill first, making Maryland the 18th state to abolish capital punishment.
Six groups of lawmakers and advocates posed for photos at the ceremonial bill signing. NAACP President Benjamin Todd Jealous raised his fist into the air when O’Malley thanked him for his lobbying efforts. Others happily accepted souvenir pens from the signing.
Other significant legislation from the legislature’s 2013 session has still not been signed, including one bill that would phase in a gas tax increase that is expected to generate $600 million annually for transportation projects and another that would give Maryland’s some of the nation’s toughest gun control laws.