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TEDCO to offer gap funds for startups between stages

Wasilisin – TEDCO President John Wasilisin addresses a crowd of employers and potential employees at a job fair hosted by Venture For America in Baltimore April 29, 2016. Dan Leaderman

‘I am certain that the demand is going to far outstrip the supply of funding,’ TEDCO President John Wasilisin said of a new fund to help startup companies who need funding after the seed stage. (File Photo)

The Maryland Technology Development Corporation will now help fund startups between the seed phase and the venture capital phase with a new Gap Investment Fund program.

The money come from $1 million included in the state’s budget for the 2018 fiscal year.

“What we find, is there is a gap between the two funds that when companies can’t find the second round of funding, they are looking out of state,” said John Wasilisin, president and COO of TEDCO. “This program is going to be designed to address that by providing a second source of capital.”

Several companies in recent years have had to go out of state to find this financing, he said, ultimately leaving the state.

During this phase of the startup process, companies have created their prototype or technology and are looking to to show that they can generate revenue.

“Now they’re looking to bring on some more companies so they can scale it up,” Wasilisin said.

The Gap Investment Fund will have a couple of strings attached for companies that want the investment.

The funds must be used to hire new employees and must be matched by private financing.

“We wanted it to really reflect job growth. That’s good for Maryland,” Wasilisin said. “Having the investment by other credited investors shows that the state is not going in alone. There are other investors that are confident in this company.”

Gov. Larry Hogan included the funds in his 2018 budget and said he hopes to see it increase incentives for companies to stay in the state.

“Technology startups often face funding challenges, particularly the critical period between receiving seed funding and being a mature enough company to attract capital,” Hogan said in a statement. “This new program will bridge that funding gap, giving technology startups a much-needed lifeline as well as incentive to stay and grow in Maryland.”

The fund will be available July 1, the beginning of the state’s fiscal year. Wasilisin anticipated an application process could begin in June, as TEDCO spends the next couple of weeks developing the program.

The funds have only been guaranteed for one year, but Wasilisin said he hopes the demand shows the need for this stage of funding.

“I am certain that the demand is going to far outstrip the supply of funding,” he said.


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