Why Maryland Will Be Your Next VC

Maryland's TEDCO has gone from ho-hum state org to something that resembles more of a VC firm. (Since its 1998 launch, it's made over 200 investments, with at least 86% of the companies still up and running.)What do its leaders have in store?

Two years ago when Rob Rosenbaum joined Maryland's TEDCO as its executive director, the state-funded organization was focused on small grants for tech companies and economic development. He was given an important first task: make TEDCO less reliant on state funds. It's quickly become a source for convertible debt to better mirror what's happening in seed funding and to increase returns on state-funded investments. Other TEDCO activities will continue to generate funds so that the organization's income is diverse, Rob says. The organization has also stepped up its portfolio management, giving a little more guidance and mentoring to its startup investments.

Rob, who was born in Atlanta but grew up in Connecticut (watching Ken Burns'The Civil War must be very conflicting), is raising money for three new funds focused on cybersecurity, veteran-owned businesses, and regional innovation. A $4.3M Baltimore city fund recently launched and started making investments. The money for these new funds is coming from foundations and wealthy individuals rather than the state, says Rob. They'll each be $20M to $25M, with investments ranging from $500k to $2M. The cybersecurity and veteran funds should be writing checks at the end of the year and the regional fund, which will focus on the Mid-Atlantic, will start early next year.Rob says compared to the average failure rate of startup companies, it's a "rip roaring success."