Small Maryland technology companies hope to win big through the state’s new $300,000 InvestMaryland Challenge, but some are concerned about competition from out-of-state businesses.
More than 34 companies, including a few from other states, have entered the challenge, which was announced last month.
The challenge will award $100,000 to one business from each of three categories: information technology, life sciences and general. The general category is open to out-of-state businesses, with the understanding that if they win, they must locate in Maryland. Any businesses with fewer than 25 employees and annual revenues of less than $1 million may apply.
All entries must include a $100 non-refundable application fee.
“As the government funding opportunities continue to be whittled away by cuts, bringing in this kind money can help small businesses get over the top,” said Dimos Katsis, president of Athena Energy in Bowie.
Katsis said he hopes to use the $100,000 prize to develop a technology that improves energy efficiency in large buildings by centralizing energy collection. Athena previously submitted the concept to the Maryland Department of Energy, which showed interest but did not provide funding, Dimos said.
The company already produces laboratory devices to help design electric vehicles and solar-powered systems, he said. Athena employs three but hopes to grow with its newest project.
The founder of Tots2Tweens of Frederick, a free online directory for parents in the Washington, D.C., region, is more hesitant to apply.
“I haven’t completed my application for [the challenge] because the category I am in would be lumped in with companies from throughout the U.S,” Danie Gurrie wrote in an email to The Gazette. “I feel this decreases my chances. It’s also tough when these opportunities require an up-front fee or cost. If I paid for every opportunity to get funds, I’d be broke!”
Tots2Tweens is seeking $300,000 to expand into new markets such as Philadelphia, Pittsburgh and the eastern part of West Virginia. To date, the company has not received any funding, although it continues to search for angel investors, Gurrie said.
“We just don’t know the right people who invest,” she said.
Michelle Jackson, program director of strategic industries and innovation for the Maryland Department of Business and Economic Development, which oversees the program, wrote in an email that its “goal is to showcase the talent within our state, but also to attract small businesses to the state by pulling them into our incubators and other resources. It’s a great thing to encourage business from outside of Maryland to come in and stay.”
Myotherapeutics in Silver Spring views initiatives such as the InvestMaryland Challenge as a “great way to get off the ground,” said chief science officer and founder Eva Chin.
Her company has received $7,500 from the Maryland Technology Development Corp. to develop drug therapies for amyotrophic lateral sclerosis and muscular dystrophy. Myotherapeutics recently finished its business plan and just started applying for grants, Chin said.
“It’s a matter of momentum. Once you get the ball rolling, you can raise more money,” said Chin, whose background includes working for a large pharmaceutical company before switching to academia and now back to the private sector. “I want to translate my research into treatment.”
Sung Ho Hahm, CEO of Rafagen in Rockville, entered the challenge to boost his company’s current $1.6 million in funding. Rafagen focuses on DNA-based cancer drug development and bio-drug manufacturing.
“We’re in the commercializing stage, but we’re trying to improve our technology to be the top of the line. This money would help us do that,” Hahm said of his three-employee business.
State initiatives often can fund the business and commercializing expenses that federal grants ignore while they’re focusing on the technology, said Dorothee Heinsenberg, COO of Clear Guide Medical, a Baltimore medical devices company.
Clear Guide provides a clip-on device that guides physicians in ultrasound procedures in which a needle is involved, such as epidurals. The company has received $700,000 worth of funding and is hoping to take its technology to the Food and Drug Administration in December or July, Heisenberg said.
“Maryland cares about commercialization,” she said.
Aside from the monetary prizes, the challenge also offers exposure, Jackson said. Applicants will have their company reviewed by more than 50 judges from various sectors. The state also is seeking venture capitalists as investment partners, who will receive access to the database of challenge applicants.
“It’s been going very well,” Jackson said.
Gov. Martin O’Malley (D) announced the challenge last month when the state awarded $250,000 to BrainScope in Bethesda as part of its InvestMaryland initiative. InvestMaryland is the state’s $84 million program designed to pump money into venture firms so they can invest in young high-tech companies.
The deadline for submissions for the challenge is Dec. 13, with winners to be announced in March.