After years of groundwork, Maryland universities saw more tangible results this year from their efforts to support new startups formed from university technology.
State and university officials hope this year’s results show a state gaining traction as it looks to attract more capital and resources so these companies can become a significant portion of the state’s economy.
“I think we’re headed in the right direction,” said J. Thomas Sadowski, the University System of Maryland’s Vice Chancellor for Economic Development. “We’re just starting to put some of the pieces in place to achieve critical mass. We’re not there yet, but we’re headed in the right direction.”
Five years ago, the Maryland legislature created the Maryland Innovation Initiative and an investment of $5 million to allow the state to invest in and promote companies created using technology developed at state universities. The initiative is run by the Maryland Technology Development Corporation (TEDCO) and includes Johns Hopkins University, Morgan State University and the University of Maryland’s Baltimore, Baltimore County and College Park campuses.
Around the same time, leaders at the universities started planning to increase their focus of commercialization of university technology.
“Five years ago, when it started, (university leaders) had to be patient,” said Jennifer Hammaker, director of the Maryland Innovation Initiative. “They needed to make the commitment and make the investment and put the time towards it, with the hope that it would come through in five years.”
Since then, there has been a notable improvement in startups created at universities and overall startups across the state. According to Association of University Technology Managers data provided by TEDCO, Maryland startup growth has increased 10 times since the creation of the Maryland Innovation Initiative.
At the University of Maryland, Baltimore County, startups created by faculty have increased from one or two a year to around 10 a year.
“I do think that momentum is building,” said Ellen Hemmerly, executive director of bwtech@UMBC, the school’s center for commercialization and development.
“It’s very reassuring, I think, if the faculty members know that there’s a process they can go through and that there’s resources that are there for them.”
In its 2010 strategic plan, the University System of Maryland set a goal of creating 325 new companies by 2020. To date, the system has created nearly 600.
This year, those companies saw more successful exits than before as well. Three companies supported by UM Ventures, the University of Maryland’s commercialization initiative for Baltimore and College Park, were acquired this year: Living Pharma, Analytical Informatics and Harpoon Medical.
Harpoon Medical was acquired by Edwards Lifesciences for $100 million in a deal that could rise to $150 million if performance-based benchmarks are reached.
Beyond creating companies at an increased rate this year, universities also reached milestones in developing their commercialization infrastructure.
Early in 2017, Johns Hopkins University opened FastForward 1812, which includes coworking and shared lab space, on the university’s medical campus. Later in the year, the university opened FastForward R. House near the Homewood campus and focused on commercialization coming out of the programs there as well as commercializing student companies.
More focus on the student side, rather than just commercializing university licenses, has been a big change for the university, said Brian Stansky, senior director of FastForward, Johns Hopkins’ internal accelerator.
“We look at the student effort; over roughly a two-year timeframe, it will go from a nascent effort to similar to what we represent from the commercial side,” he said.
On the other side of Baltimore, the University of Maryland opened its own innovation space focused on student companies this month. The Graduate Research Innovation District (GRID) will house coworking space and an office of the Fischell Center for Medical Devices. The Fischell Center is a collaboration between the Baltimore and College Park campuses. Its offices are included in the A. James Clark Hall in College Park, also completed this year.
Hopkins and the University of Maryland also collaborated, along with Plank Ventures, the Abell Foundation and Brown Advisory, to create M-1 Ventures. The accelerator takes established startups and focuses on scaling up their sales processes.
While the universities had successes building up startups and startup infrastructure this year, there are indications that more work needs to be done. A report this fall from Johns Hopkins University concluded there has not been enough capital invested in businesses to keep them from leaving for places where money is prevalent, like Boston or San Francisco.
But leaders believe that if they can continue on their current path Maryland can become a hub for cybersecurity and medical device companies. First, they need to create successes to attract capital and experienced executives.
“We need the funding once these companies get started to keep them growing, to help find them space,” said Gary Attman, a regent of the University System of Maryland who chairs a committee on commercialization and economic development. “The other thing I think we need … is business leadership to take these small companies and grow them.”
Funding can be an obvious need, but it’s that leadership that is critically needed. Experienced executives who have taken startups through a lifecycle can become mentors and lead new companies as well.
But the funding is an important part of the equation. Programs like the Maryland Innovation Initiative have helped companies get started. But there’s another stage, between the seed funding stage and the venture capital stage, where companies need to find money.
Two funds created this year hope to address that gap: TEDCO created a Gap Investment Fund, and the University System of Maryland created the Maryland Momentum Fund to invest in university companies.
“I always call it late-seed stage funding,” said David Wise, the director of the Maryland Momentum Fund. “There’s this gap where they need money to get from the very early stage capital to the venture investing. That’s exactly where we’re trying to position this fund.”
Wise also believes that recent successes could be helpful in drawing more talent and capital to the state, pointing to Harpoon Medical’s acquisition. It’s a winner from the area that other companies can point to, he said.
After this year’s results, universities are not set to rest on their laurels. Instead they are viewing 2017 as another part of the foundation towards startups becoming a critical piece of the state economy.
“I just think we need to keep our foot on the gas and we need to do more to make sure we’re offering the kind of support and investment that these companies need,” Sadowski said. “We can’t just claim victory now on some of the recent successes and stop what we’re doing. There’s a lot of work that needs to be done.”