Fein-Marquart Associates, a small Baltimore custom software designer, has availed itself of a federal grant program to help commercialize scientific projects, to the tune of almost $2 million in the last four or five years.
The money, in the form of virtually no-strings-attached grants, was awarded by the National Cancer Institute under the Small Business Innovation Research program. The program requires large federal agencies to set aside 1.25 percent of their budgets to fund basic research and commercialization of technology being developed at small scientific companies.
"SBIR is . . . equivalent to getting seed venture capital without giving up equity in your company," said Walter H. Plosila, president of the Montgomery County High Technology Council Inc.
But according to a new report on the program, Fein-Marquart increasingly is becoming an anomaly. The report shows Maryland is starting to lose ground to more aggressive states. In 1989 Maryland fell from third to fifth place in the number of awards received, behind Virginia and New York, according to the Abell Foundation, which published the report. And it dropped from third to fourth place in the amount of awards, from $27 million to $20 million. The reason, Abell said, is that competition for the awards is increasing, and Maryland has developed no formal program to help companies win SBIR awards, as a dozen other states have.
"Unfortunately, Maryland has been delinquent in assessing its SBIR program and incorporating it into the broader economic development agenda of the state," said the report, "Leveraging Innovation: The Need to Expand Maryland's Role in the Federal Small Business Innovation Research Program."
Dr. Gary Marquart, founder and owner of Fein-Marquart, said his employees took it upon themselves to apply for their SBIR grants. "We have not made use of any state programs," he said. "We're not even aware of them." The Abell report urges Maryland to develop a formal program to find more potential SBIR grant recipients, help fund the cost of applying and provide technical assistance.
Though Maryland companies received more awards in 1989 under Phase I of the program, in which grants total about $50,000, the more lucrative Phase II awards of up to $500,000 are on the wane, according to Abell, falling from 58 awards in 1988 to 35 in 1989.
State officials say that is partly because the federal agencies no longer invite every Phase I company to apply for the next level of funding.
But Robert Sklar, deputy director of the Office of Technology Development in the state Department of Economic and Employment Development, acknowledged that "there is no specific program that provides financing [to draw up grant proposals] or does a more focused matchmaking type of thing."
Still, Mr. Sklar said, the state does provide challenge grants of up to $37,000 that can be used by SBIR-funded companies.
Mary Lou Baker, a department spokeswoman, said the Abell report "does not sound an alarm because Virginia, New York and Maryland have been jockeying back and forth for the last couple of years."