O'Malley: New VC Money Needed To Fuel Economy
ANNAPOLIS — Gov. Martin O'Malley made rare appearances in Senate and House committees Wednesday to endorse his plan to fuel innovation and high-tech jobs by pumping roughly $100 million into a new fund aimed at promoting startups.
O'Malley's plan is dubbed "Invest Maryland," and it's one of his key initiatives this session. He touched on the proposal during his inauguration speech in January and briefly outlined details weeks later during his State of the State address.
Wednesday's hearings gave O'Malley another shot at pitching the proposal to lawmakers — this time with the focus entirely on the bill.
The biggest obstacle for Maryland startup companies, O'Malley said, is a lack of adequate seed money to help turn ideas into commercialized technology. The "Invest Maryland" plan addresses that shortfall by getting venture capital flowing to the tune of roughly $100 million over five years.
"The states that win will be those that can spur innovation," O'Malley said, repeating a theme he sounded during his State of the State address that emphasized creating thousands of new jobs through innovation.
Here's how the proposal works: The state would create a tax credit insurance companies could purchase through a competitive-bidding process (Note: there is talk of expanding the tax credit beyond insurance companies). The money generated through the tax-credit auctions - an estimated $99.4 million between fiscal 2012 and fiscal 2014 - would be turned into cash that's pumped into early-stage technology, life sciences and other companies.
The state would manage half the pot and the rest would be overseen by "designated third-party venture capital firms," according to the bill's fiscal note.
If the investment is successful, money is returned to the state — just like almost any other venture capital deal. Under the proposed legislation, Maryland is slated to receive a 100 percent return and 80 percent of profit generated on successful investments.
The plan could provide a "direct benefit" to 200 to 400 small businesses, according to the fiscal note.
"The goal is if we do this right we create an evergreen fund," said Christian Johansson, secretary for the Maryland Department of Business and Economic Development.
The bill appears to have enough support to get out of committee.
O'Malley testified before the Senate Budget and Taxation Committee, where seven of the 11 members are co-sponsoring the bill. He later testified before the House Ways and Means Committee, where 11 of the 23 members, including the committee chair and co-chair, have signed on to support the legislation.
Aside from Johansson, O'Malley was joined Wednesday by several heavy hitters who offered strong endorsements. Among them: Johns Hopkins University President Ronald Daniels and University System of Maryland Chancellor William Kirwan.
Republicans have criticized the plan, saying the government shouldn't interfere with private sector investments. On Wednesday, the Senate committee members were more concerned with understanding the details of the plan, like whether the bill would require companies receiving investments to produce their technology at local manufacturing plants.
And Sen. Roger Manno, a Democrat from Montgomery and a co-sponsor of the bill, wanted reassurance about the state's ability to pick the right companies to invest in because some lawmakers are "a little jumpy" about investments.
Not to worry, Johansson responded, pointing to the Maryland Venture Fund which has invested $25 million in Maryland-based companies since 1994 and returned $61 million to the state.
"We have a proven track record of doing this," Johansson said.
As O'Malley left the Senate hearing, he we was swarmed by supporters of a bill that would allow undocumented students to pay in-state tuition at Maryland colleges and universities.
By Capital News Service's David Saleh Rauf.
Honest Tea's CEO Says Things Go Better With Coke
Coca-Cola's acquisition of Bethesda-based beverage producer Honest Tea continues to move forward, said Seth Goldman, the company's co-founder and CEO.
Goldman was the keynote speaker Wednesday at a Washington forum on sustainable business practices.
The Atlanta-based beverage giant purchased a minority share of Honest Tea in 2008. Since then, Honest Tea's distribution has expanded five-fold - from 15,000 to 75,000 sales outlets - and sales have tripled, Goldman said.
Honest Tea shareholders were formally notified Tuesday of Coca-Cola's plan to purchase the company's remaining shares. The company will remain headquartered in Bethesda, Goldman said in a blog post.
Goldman is optimistic about the acquisition - under which he will maintain an ownership stake - and hopes consumers will see the potential "green" advantages of wider distribution of Honest Tea's organic products.
"It's easy to fall into the 'big is bad, small is good' trap," Goldman said. But in addition to moving Honest Tea into a larger distribution network - helping fulfill the company's goal "to make organics democratized" - Coca-Cola also offers resources that can further sustainable business practices.
For instance, Goldman said, Coca-Cola is developing more eco-friendly bottles made from molasses, and its bottling plants waste less water than Honest Tea's other bottling facilities.
"Coke's (bottling) strategies are more advanced than ours," Goldman said.
Honest Tea, which also produces juices, is planning to expand beyond beverages and expects to launch a new fruit drink in about two months, Goldman said. "There's a lot more on the way."
By Capital News Service's Steve Kilar.