USM Board of Regents approves $25 million early stage investment fund

The University System of Maryland (USM) Board of Regents announced on June 10 that it has approved a $25 million pool of venture capital, known as the USM Early Stage Investment Fund (ESIF), focused on investing in USM-affiliated companies.

These companies include start-ups that are based on USM-owned intellectual property, companies founded by USM faculty, students, or recent graduates, and companies located in USM research parks, incubators or RISE (Regional Institution Strategic Enterprise) Zones. The approval came today during the board’s June meeting, held at the University of Maryland Center for Environmental Science (UMCES) Horn Point Laboratory in Cambridge, Md.

The policy establishes a framework for USM to invest $10 million over four years in the fund. An additional $15 million would be raised from venture funds, the state of Maryland, foundations, and friends of USM.

The genesis for the venture fund came at a March 31 meeting of the board’s Committee on Economic Development and Technology Commercialization, chaired by Regent Gary Attman.

“We think this will advance the creation of great companies in Maryland, and retain them in Maryland as both standout companies and employers. We think it’s important for the university system to put our own money up and show how much we believe in these companies,” Attman said.

“We also feel that we’re going to attract a lot of outside capital. We feel there’s a lot of interest in our scientific research, and our innovation is first-rate,” Attman said.  “Many other states have these sorts of funds. We do not. With the amount of patents we’re creating and innovation occurring, the new company formation, we are a bit behind and this will help us catch up.”

In fiscal year (FY) 2014, the board approved the Policy on Investments and Loans to Maryland‐based Businesses that License University Intellectual Property (Policy No: VIII – 14.00). The policy helped establish investments and loans totaling $400,000 in five start-ups during FY 2015 from UM Ventures, joint program through the MPowering the State initiative that has brought together the University of Maryland, Baltimore (UMB) and University of Maryland, College Park (UMCP) to commercialize discoveries by engaging partners in industry and social ventures.

This funding has already helped to attract an additional $17 million into these start‐ups, leading to the creation of more than 20 jobs. Despite this early success, the program has been limited. It has been under‐funded and excludes promising start‐up companies closely affiliated with USM but ones that have not licensed USM intellectual property.

“This fund will play a critical role in advancing the success of start-up companies in our system and expanding economic development for our state,” said USM Chancellor Robert L. Caret. “This is a well-conceived, bold initiative that will allow the USM to help push Maryland toward the success areas such as Silicon Valley and the North Carolina ‘research triangle’ have experienced in technology transfer. We are positioned well in our state to make similar advances.”

Four USM research institutions – UMB, UMCP, UMCES, and the University of Maryland, Baltimore County have identified 17 USM‐affiliated start‐ups that are strong candidates for early stage investments. This group includes biotech, medical device, cyber security, environmental sciences, and energy companies affiliated with these universities.

Since FY 2011, there have been 450 companies facilitated by USM institutions.

Source: University System of Maryland

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