The Maryland State Retirement and Pension Systems announced yesterday that it will invest $15 million in a state-created trust fund, a move that in one swoop makes the fund a significant player in the state's venture capital financing arena.
The investment in the Maryland Venture Capital Trust raises the nearly 2-year-old fund's endowment to $17 million and enhances a statewide economic development goal of encouraging the growth of small, high-tech companies.
But worthy entrepreneurs need not apply. The trust will spend its money only on other professional investors, those with a significant emphasis on Maryland start-up companies, according to John C. Weiss III, managing director of the fund.
"The trust will not ever invest in a direct deal, in a company," Mr. Weiss said. "The trust will invest only in other venture capital funds, as a limited partner."
He said he received calls from five venture funds in the last two days as news of the retirement system's decision spread.
The venture trust will begin to accept proposals in mid-December, Mr. Weiss said, and likely will make its first investments by the end of January.
It will focus on biotechnology and information technologies, he said, in keeping with state government's new strategic focus on those areas.
The 1990 General Assembly passed a law that created the venture capital trust and provided its first $2 million. Mr. Weiss said that the state retirement system, with its total $12 billion investment portfolio, is only the first investor and that the venture capital trust is talking with others in the state.
"We're in the queue with some other pension funds now," Mr. Weiss said.
Mark L. Wasserman, Maryland's economic development secretary, noted that Maryland ranks among the top three states for federal and university research dollars, and for scientists and technical personnel in the work force. But the state ranks 21st in the number of patents issued for new products.
"A major reason for this lack of commercialization is that start-up businesses have not been able to obtain critical early stage funding," Mr. Wasserman said in a statement.