ANNAPOLIS – With increasing competition between Maryland and Virginia for new business, two Maryland lawmakers want to create an incubator program to foster new business growth.
Companion bills sponsored by Delegate Kumar Barve, D-Montgomery, and Sen. Patrick J. Hogan, D-Montgomery, call for the Maryland Technology Development Corp., or TEDCO, to start and administer the Maryland Technology Incubator Program. The state would provide $10 million annually, beginning in the 2003 fiscal year.
Incubator programs give potential business owners the incentive to locate in Maryland, said Barve, who introduced the bill in the House of Delegates Thursday.
Scientists and engineers with abundant knowledge of technology don’t always have the skills to launch and run a business. The incubator program will help them develop those skills, he said.
The Maryland Technology Incubator Program would make grants up to $1 million in a particular county, Barve said, with the local jurisdiction required to provide matching funds. Local governments, public colleges and non-profit agencies would be eligible.
The new program also will help Maryland capitalize on its abundance of scientific research and inventions from its universities and federal laboratories, said Barve.
“We’re not as good at commercializing and turning (research) into business,” said Barve.
The program might have a good shot at success. Although a number of for- profit incubators have shut down recently, government-funded or non-profit incubators have succeeded here.
“There is nearly a quarter century of success with public incubators that is very positive,” said Phillip Singerman, TEDCO executive director. “The most successful models have been public models.”
Incubators are not profit-making entities, and their success should not be rated by their profits, said Singerman. Privately funded incubators are less likely to succeed as financial ventures because they will not generate enough money to cover all the costs, he added.
“Incubators are a very cost-effective mechanism for helping technology companies get started,” he said. “But they’re not real estate ventures.”
The Tech Council of Maryland already operates a successful publicly funded incubator program, the Maryland Technology Development Center, which receives support from the state and Montgomery County, Barve said. The University of Maryland, College Park also runs a thriving incubator.
The Maryland Technology Incubator Program will be modeled on programs like the Maryland Technology Development Center, which gives low-cost office space and support services to start-up businesses. The program is effective because it provides resources to businesses at a critical development period, said Duc Duong, the incubator’s director.
“The program allows these companies to start with low capitalization so they can focus on their technology, rather than on real estate,” said Duong.
The center, which opened in January 1999, houses 20 companies: 13 biotechnology and seven information technology businesses.
“We got full occupancy by the end of 1999,” said Duong. “Currently it is full.”
Businesses are expected to graduate from the program in three to five years when they outgrow the space and can operate independently. Five companies graduated in October 2000.
Despite the center’s – and other publicly funded incubators’- success, Maryland still needs more resources devoted to them, Barve said.
“There’s an enormous demand that’s going unfulfilled,” he said.
The House bill was referred to the Economic Matters Committee, and the Senate bill was referred to the Finance and Budget and Taxation Committees.
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