The Maryland Technology Development Corp. (TEDCO) has announced $1 million in new economic development funds that will provide startup technology companies with investment capital to help cover the gap between seed funding and venture capital investments. The Gap Investment Fund program, which was included in Gov. Larry Hogan’s fiscal 2018 budget, is being developed and administered by TEDCO.

TEDCO’s Seed Investment programs support approximately 50 companies per year, creating a funnel of companies that serve as a source of deal flow for the new Gap Investment Fund initiative. A Seed Investment of $100,000 can support a project that advances a technology toward commercialization. TEDCO’s later-stage fund, the Maryland Venture Fund, and other venture capital funds, support companies further along in their development, often with significant revenues and complete management teams that are raising investment rounds of more than $2 million. This established structure leaves a significant funding gap between the state’s seed investments and the investments made by institutional investors such as venture capitalists.

TEDCO now will provide gap funding up to $500,000 to Maryland-based technology companies to hire new employees for expansionary efforts such as scaling a product across markets and increasing market reach. These new funds must be used to hire additional employees and must be matched by other investments in the company.

“Startups generally require funding for their move from validating products to establishing a toe-hold in the market and generating revenues. This activity often falls in the gap between seed and venture investment, which usually requires a company to have revenues,” said John Wasilisin, president and chief operating officer of TEDCO. “TEDCO’s goal is to bridge this funding gap and help build successful companies to spur economic development in Maryland.”