The Underfunded Venture Capital Pool In Maryland’s Hi-Tech Start-Up Businesses at Disadvantage

March 1994 / Abell Reports / Community Development

67 percent of Maryland’s start-up technology-related businesses say they have a need for financing not available through banks. There are proven solutions–if there is political will.

Venture capital is the mother’s milk of new business formation. It can make the difference between a healthy start-up business and an unhealthy one, and sometimes the life or death of one. Though the success of new business formations is vital to the Maryland economy, sixty­ seven percent of technology-related Maryland businesses say they have a critical need for financing not avail­ able through commercial banks.

It follows that if Maryland hopes to stay competitive with other states in this area of economic development, it will have to develop programming that addresses this need. That need is underscored by recent findings:

  • In a report by the Carnegie Commission Task Force on State tech­nology policy, Maryland did not make it into the top ten states in appropriations for technology programs.
  • In a study of publicly-funded state venture capital investment programs conducted in 1991, Maryland was ranked 11 out of 17 states in the amount spent on venture investments.
  • In an examination of state pension fund-sponsored venture capital programs, Maryland lagged behind 10 other states in the amount spent on and per­ centage dedicated to venture in­vestments.

The net results of Maryland’s lackluster performance in providing venture capital to its emerging growth companies is only too clear: while other states are developing the ven­ture capital needed to support the growth of start-up technology companies, Maryland is falling further and further behind.

As a result, it is the state’s economy that is suffering; the state’s leadership has its work cut out for it.