Two Maryland startup companies have a couple hundred thousand dollars extra to play with after the latest disbursement of venture capital from a special state account.
Baltimore-based SocialToaster LLC, a social media and customer engagement company whose clients include the Baltimore Ravens, got $200,000 in state money to help take the business national, the state Department of Business and Economic Development announced Monday. The company, which has 17 employees, plans to add a handful of staffers by the end of the year.
ReelGenie, an online service that takes customers’ photos and other digital content and helps turn that into videos, got $150,000. The Silver Spring startup, which has four employees, will use the money to add marketing, software development and business development staff to its payroll.
The investments were made through the $84 million InvestMaryland program, Gov. Martin O’Malley’s signature economic development initiative during the 2011 General Assembly session.
The program was tweaked by the legislature this year to lure private venture fund managers, which are responsible for $56 million of the total fund. Successful investments return 100 percent of the principle and 80 percent of the profits to the state general fund.
The Maryland Venture Fund handles the balance of InvestMaryland money, which is targeted toward businesses in high-tech, high-growth sectors.
“Supporting our entrepreneurs, startups and small businesses is a top priority for Maryland as we grow our innovation economy,” O’Malley said in a statement. “Our high-tech entrepreneurs place Maryland at the forefront of innovation and discovery. … We look forward to their future growth and success in our state.”
SocialToaster is the more mature of the two companies, having being contracted by the Ravens and television shows on A&E and Lifetime Television. The company helps clients find and recruit “super fans” on social media, who then agree to let organizations post sponsored content on their Twitter, Facebook, MySpace or LinkedIn pages.
In the case of the Ravens, fans who sign up to be conduits for team advertising on social media compete for prizes, which have included signed team jerseys and Super Bowl XLVII swag.
SocialToaster co-founder and CEO Brian Razzaque welcomed the state investment and stressed that the company was committed to Baltimore and Maryland.
“It’s important to us that we maintain strong ties to the community and contribute to the growth of technology innovation in the region,” Razzaque said. “The support of the Maryland Venture Fund will help us to not only grow nationally, but to continue to strengthen our roots right here in our own backyard with other great regional organizations.”
David Adelman, ReelGenie’s founder and CEO, said his company filled a niche in the market by helping legions of smartphone and digital media users put together video “with the same quality as a professionally produced movie.” Including the InvestMaryland money, ReelGenie announced Monday it had raised $850,000 in seed money from various other sources.
“More than ever, consumers are telling the stories of their lives, both online and offline, through photos, videos and narratives,” Adelman said. “ReelGenie empowers them to organize this wealth of data and publish it in a compelling way.”
InvestMaryland has been criticized by some, who say the state does not know how to properly handle venture capital and should not be in the investment business. As the legislature adjourned this year, $25 million had been given to private investors, but only $5 million of that money had been invested in Maryland companies.
DBED officials said changes to InvestMaryland — approved by the legislature and signed into law by O’Malley this summer — were necessary to break up that logjam.