Maryland will have $84 million to funnel to up-and-coming companies as part of the state’s InvestMaryland program, after a tax credit auction
on Thursday raised more money than economic development officials anticipated.
InvestMaryland was the cornerstone of Democratic Gov. Martin O’Malley’s economic development initiatives during last year’s legislative session. The program essentially makes investments against future tax revenue with the hope that the return from young companies will pay off over time.
Officials said firms in high-growth industries, such as technology and life science, are essential to creating new jobs in the midst of an economic slump, yet many of these firms struggle to raise much-needed capital.
The state planned to generate at least $70 million to invest in companies by auctioning off $100 million worth of tax credits to insurance companies at a reduced rate.
Instead, the bidding prices drove the sum to $84 million, a figure officials said exceeded their expectations. That money will be received in three installments with the first due June 1, said Christian Johansson, secretary of the department of business and economic development.
A total of 24 companies participated in Thursday’s auction, 11 of which were ultimately awarded the credits. The recipients include: Agency Insurance, Chubb, Geico, Hartford Insurance, IWIF, Med Mutual, Met Life, NY York Life, Selective and Traveler’s. Insurance companies can claim tax credits beginning in 2015.
That money would be divided into two pools: One-third would be invested directly by the state, primarily into early-stage ventures that require between $50,000 and $250,000. The remaining two-thirds will be given to select venture capital firms that will invest it as they would any other capital.
The terms of those investments as well as target industries are still being determined, said Peter Greenleaf, chairman of the Maryland Venture Fund Authority and president of Gaithersburg-based MedImmune.