Maryland Poised to be Nationwide Leader in Innovation
Maryland faces a “perfect storm.” No, we’re not talking about this year’s hurricane season or that George Clooney movie. Rather, this is a storm that if weathered well has the potential to drive business growth and new jobs in our state for the next decade.
To remain competitive and continue to grow, both in terms of business start-ups and new jobs, repeated studies share the same conclusion: states must turn innovation into growing businesses. That is precisely the opportunity – and the challenge – facing Maryland.
Consider this. Venture capital investment in Maryland is currently at an all-time high. So, too, are the levels of economic impact for entrepreneurism and the demand for services from organizations supporting start-ups and early-stage companies, led by The Maryland Technology Development Corporation (TEDCO).
A recent study by Battelle, the world’s largest non-profit research and development organization, shows that TEDCO’s impact on Maryland’s economy was nearly $1 billion in 2015 alone. The Battelle study also found that TEDCO’s efforts generated nearly 4,500 high-quality high-tech jobs in our state, with salaries well in excess of the state average. In addition, companies receiving funding, mentoring and networking support from TEDCO returned nearly twice as much in state and local tax revenue – $35.8 million – as the organization’s annual operating budget ($18.7 million).
Add to this the fact that Maryland’s economy continues to outperform the country as a whole. Information technology, telecommunications, aerospace and defense continue to drive the state’s economic growth, while Maryland is recognized internationally as a leader in the mapping of the human genome and commercial applications that result from its research.
Maryland is also blessed with one of the most talented and educated workforces in the country. The state ranks first nationally in the percentage of professional and technical workers, and is home to two of the nation’s leading academic research institutions (not to mention many of the nation’s federal research labs). But despite this perfect storm of “opportunity,” if all these resources came together, the Battelle study confirms that Maryland’s pace of innovation – and of transforming promising research into promising companies – currently lags behind that of other states with fewer assets.
Clearly, the opportunity is there for the taking. So what needs to happen for Maryland to fulfill its promise as an innovation-driven economy? Experts in the field typically point to a number of factors, ranging from lowering the capital gains tax to shoring up the state’s infrastructure to technology transfer, all of which are designed to make certain Maryland remains competitive.
While all of these undoubtedly have merit, I would argue that the best way for Maryland to take advantage of this perfect storm is to foster a greater entrepreneurial environment. Economic development efforts must focus on initiatives that support growing innovation ecosystems – highly interactive communities of entrepreneurs, academic institutions, investors, support organizations and experienced advisors – so that successful companies and their entrepreneurs not only grow in Maryland, but also remain here as they grow and attract other similar firms to do the same.
To achieve this ecosystem, we need to engage and nurture those talented individuals who will actually be creating these companies and generating new jobs, namely millennials. Our economic development efforts must understand how this generation creates, works and lives. We also need to make sure the leaders from this generation are in positions of influence in the ecosystem. They need to have a say in the solutions that emerge and in effectively marketing the advantages that Maryland provides.
The good news is that the pieces are coming together. Beyond the resources that Maryland already possesses, Governor Larry Hogan has signed no fewer than 10 bills designed to spur economic growth through reductions in business taxes and the creation of a special task force to determine the impact of regulations on small business. The University of Maryland and Johns Hopkins University, meanwhile, have turned the corner when it comes to commercializing their technologies.
Maryland has also seen the development of numerous accelerator programs and other alternatives for creating promising companies, providing top-shelf resources, including mentoring and seed capital, to young tech companies. These programs are attracting companies from around the world, many of which have set up permanent residence in the state. Similarly, programs such as Advance Maryland are helping second-stage companies to address their unique challenges and identify new opportunities, while employing a “grow from within” strategy that targets the state’s existing growth companies.
If we truly take advantage of this unprecedented perfect storm, we will see not only a broader recognition of the many attributes Maryland offers to entrepreneurs, but also creation of a viable platform for continued economic growth and job generation. Now is the time for Maryland’s stakeholders in our innovation ecosystem to work collectively to move our state into the top tier in the country.
As for TEDCO, we can and must do more. The Maryland Economic Development and Business Climate Commission (Augustine Commission), which was tasked by the Maryland legislature to identify the key challenges and drivers of Maryland’s business climate, regarded TEDCO as “a highly effective facilitator of early-stage business development and entrepreneurship.” The Battelle study concluded that TEDCO is at the center of Maryland’s innovation ecosystem.
To play an even greater role in bringing research created in Maryland’s educational institutions and federal labs into the commercial marketplace, TEDCO is increasing its programs, including deploying new venture funds, to reach even more entrepreneurs. We are also committed to continuously evolving, to listening to our entrepreneurs, to designing new programs that help foster our innovation communities, to reaching communities we have not served before, to championing not only our successes as a state but also the promise of what is to come.
We know the DNA of our state can realize its potential and meet the challenges of competing in an innovation economy. We at TEDCO also know we have purposeful and exciting work to do to ensure that Maryland exceeds the promise of this perfect storm of opportunity. I95