State gives start-up companies $50,000 grants

March 31, 1994|By Mark Guidera | Mark Guidera,Sun Staff Writer

In the lonely confines of his home, Dan Thomas tinkered and toiled away on his passion: developing computer software for highly sophisticated geographic mapping systems.

"When people ask what I do at parties and I tell them, their eyes sort of glaze over and they laugh and move on to conversation about the weather," says the affable 31-year-old Columbia resident.

But it's Mr. Thomas, a former Alaskan, who is all smiles these days about his arcane interest.

He and his fledgling Columbia-based company, Innovative System Developers, Inc., are among 10 young, high-tech oriented companies in Maryland which recently were awarded $50,000 grants by the state. The grants are aimed at helping the start-up companies bring their innovations to the marketplace.

Custom Materials, Inc, a one-man operation founded by Ellicott City resident Dennis Nagle, was the only other Howard County company awarded a a challenge grant this year from the field of 50 firms statewide which applied.

The grants are awarded under the state's Challenge Investment Program, administered by the Department of Employment and Economic Development.

The program, which requires recipients to pay back the grant within 10 years, was started in 1989. Since then, it has awarded $1.7 million in grants to 32 small Maryland-based companies in the high-tech field, said Mary Lou Baker, a department spokeswomen. Of those 32 firms, three have failed.

Under the terms of the grant, recipients must pay the money back over a 10-year period, unless the company goes out of business. The state requires a royalty of 2 percent of the recipients' net annual sales revenue above $500,000.

Also, recipients must return to the state one percent of any capital above $2 million the firm receives from investors after the awards are made, said Ms. Baker. In either case, payments to the state are capped at $50,000.

"Fifty-thousand isn't a lot of money to a really big company, but to us it makes a world of difference," said Mr. Nagle, a Martin Marietta materials scientist for 17 years. He started his company after he was laid off one year ago by the giant defense and aerospace contractor.

Among Mr. Nagle's efforts: developing high heat resistant coatings for the electric batteries that will fuel the cars of the future and perfecting corrosion resistant coatings for brass and other metals.

He is familiar with the technologies from his work on aerospace and other projects for Martin Marietta.

"I knew these technologies had market potential. Solving the problems of the technology is all that is needed." The grant will allow him a certain freedom to work on the technology kinks, while not also worrying how to keep the company solvent.

"The really great thing about the challenge grant is that the venture capital people now are calling me and asking me out to dinner," said Mr. Nagle, a father of five who has fretted nights about how he would pay the food bill and mortgage while getting his business rolling. "Before this I was calling them and wondering when they'd get back to me."

"It's not so much the money, but the prestige and stamp of approval that come with the award," said Mary Lou Baker, a spokeswoman for DEED. Interest in award recipients and their innovations is often sparked among venture capitalists, said Ms. Baker.

Both Mr. Nagle and Mr. Thomas believe the market for their innovations is potentially vast.

For Mr. Nagle's high-heat resistant coatings, potential customers include the big three American car manufacturers, which are currently working in alliance to develop an efficient electric car.

As for his corrosion resistant coatings for metals, Mr. Nagle has his eye on the marine and home construction industries.

For Mr. Thomas, who now works out of a Columbia office with eight employees, potential customers include local and state governments for a software program Mr. Thomas designed called Geo-GUIDE.

It makes it easy to use what are known as Geographic Information Systems. The systems are computer data bases of highly detailed local, regional and worldwide geographical information, from land topography to street maps.

Mr. Thomas also has developed a software program called Geo-STORM. It calculates the direction and intensity of storm water runoff that would be caused by development. The calculations help engineers determine what type of storm water protection measures would prevent pollution of watersheds.

So far, his firm's customers include NASA, the Vermont Department of Agriculture and a marine biology institute in Greece. But he sees a strong global market for the software that needs to be explored.

So, he plans to use his $50,000 grant to hire a person to handle marketing Geo-GUIDE and Geo-STORM worldwide and pay for marketing literature which introduces potential customers to the software products worldwide.

Mr. Nagle of Custom Materials plans to use the $50,000 grant to lease office and lab space in the Columbia-Ellicott City area so he can go into high gear with his research and be ready to produce products that generate interest.

Said Mr. Thomas, "For a lot of companies $50,000 isn't a lot of money, but to me it's leverage for the future."

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