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Stories of the year: Money comes for Maryland tech startups

Facet Wealth's CEO and co-founder Anders Jones. (Facet Wealth)

Facet Wealth’s CEO and co-founder Anders Jones. (Facet Wealth)

Maryland took a couple of big steps forward in 2018 toward becoming the sleeping tech startup giant that many in the state think it can be.

Maryland companies raised more money than they had in more than two decades, fueling hopes that the state has begun to attract the interest of investors for the talent and the companies it is producing.

But some other moves may prove to be more valuable to improving the startup infrastructure in the state, including plans to create a cybersecurity hub at Port Covington in Baltimore and Amazon’s announcement that it would put a headquarters in Arlington, Virginia. The two moves could bring the type of talent and leadership to the area that can fuel a tech startup ecosystem.

Funding gets going for Maryland startups

Funding for Maryland’s venture-backed startup companies picked up in a big way in 2018, continuing success from the fourth quarter of 2017.

Maryland-based startups have raised a total of $250 billion in each of the last four quarters and are on pace to top $1 billion for the year, according to PricewaterhouseCoopers quarterly MoneyTree report. Through the third quarter of the year, firms had raised a total of more than $918 million. Maryland companies have raised more than $1 billion a year just one other time in the Moneytree report’s history, which dates back to 1995.

VielaBio made the biggest splash of the year. In February the biotech firm spun out of MedImmune, a division of pharmaceutical giant AstraZeneca, with $250 million in funding and six potential medicines to develop.

But the wealth was easily spread across the state for firms large and small. Big fundraisers included $80 million for Sonatype and $78 million for IronNet Cybersecurity. But smaller firms like FactoryFour raised $5 million.

Firms also moved to Maryland to find success. FacetWealth raised $33 million and Sisu Global Health raised $1.2 million.

The hope is that a year with heavy deal activity for Maryland firms, whether they are raising $1 million or $100 million, has helped stabilize and set a new standard for the area. Startups in the state have not raised less than a combined $100 million in a quarter since the fourth quarter of 2016.

Port Covington and Amazon could bring attention to Maryland startups

George Davis, the CEO of TEDCO. (File)

George Davis, the CEO of TEDCO. (File)

Tech startup boosters in Maryland hope two large regional projects announced in 2018 bring more attention to the state’s startup companies from investors.

Port Covington’s plans to create “Cyber Town USA” will include a $400 million investment fund from cybersecurity investment venture fund AllegisCyber. The development will also include startup studio DataTribe.

Those moves will bring the type of resources the state’s business leaders have been looking for to take its startup ecosystem to the next level. That includes the money that keeps a startup in Maryland, rather than moving to Boston or Silicon Valley, and a deeper roster of successful startup leaders who can help mentor and develop the next generation of businesses.

Amazon’s decision to open a headquarters in Arlington could bring much of the same attention to Maryland. While Amazon’s National Landing project will be across the Potomac from Maryland, it will drive demands for talent and resources in the entire Washington metroplex.

George Davis, CEO of TEDCO, often talks about how investors like to sleep in their own beds. The Amazon and Port Covington projects, Maryland leaders hope, create an incentive for investors to make the Baltimore and Washington their home base.

Cybersecurity investment tax credit

Maryland took a step to make it easier for the state’s cybersecurity companies to find success. The state legislature passed and Gov. Larry Hogan signed into law a measure that allows Maryland companies to use tax credits to buy cybersecurity products from Maryland companies.

Small companies can get tax credits that make the increasingly necessary cybersecurity products more affordable for them.

But the law also creates a greater incentive for cybersecurity companies to stay in Maryland. While the state has great infrastructure for building these companies, including the National Security Agency and U.S. Cyber Command, these companies are often lured out of state once they become attractive to investors in other parts of the country.

The bill also provides tax breaks for investing in cybersecurity companies. That could help keep those companies in Maryland by creating greater incentives for Marylanders to invest in the firms and keep them here where they can keep an eye on them.

Tenable goes public

Tenable CEO Amit Yoran (submitted photo)

Tenable CEO Amit Yoran (submitted photo)

Tenable, one of Maryland’s most notable startup successes, reached its exit last July when it went public under the ticker TENB.

Announced in late June, Tenable went public July 27, raising $280 million. It was the largest initial public offering for a cybersecurity firm in five years. The firm’s shares were priced at $22 and opened at $33.

Since its initial offering, the firm’s stock price has dealt with the same turmoil many tech companies have experienced over the past month. After reaching a high of nearly $40 per share in October, the firm’s share price reached a low under $21 Dec. 21.

The firm’s successful offering positioned it as an example for how other startups might find success in Maryland, especially working out of cybersecurity hubs like Columbia, where Tenable signed a long-term lease in 2017.

The firm’s co-founders, Ron and Cyndi Gula, have also made their mark, creating Gula Tech Adventures to try to turn their experience into 10 more Tenable-like successes.

TEDCO focuses on building great companies

TEDCO, the Maryland Technology Development Corporation, reorganized as part of its TEDCO 2.0 efforts, what CEO George Davis has described as a revamp of how the organization interacts with Maryland startups.

As part of the new efforts, the organization will focus on being disciplined and making good investments, especially considering the overall economic value a startup can have on the state.

A significant part of the reorganization involved bringing TEDCO’s Seed Fund under the control of the Maryland Venture Fund. Andy Jones, TEDCO’s chief investment officer, said the fund wants to focus on building great businesses with the belief that they will mean great things for the state’s economy.


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