Johnson & Johnson and a state technology agency plan to announce today that the New Jersey health care giant will match certain investments by the state in early-stage Maryland companies.
The initiative pairs the maker of everything from the venerable Band-Aid to cardiology products with the Maryland Technology Development Corp., known as TEDCO, a state organization created in 1998 to make entrepreneurs out of academics by helping to commercialize their science and technology inventions.
TEDCO will identify promising Maryland investment opportunities for Johnson & Johnson, which plans to set up a fund for the venture. If the company is interested in a prospect, it will "co-invest on a dollar-for-dollar basis" with TEDCO, said Frank A. Adams, TEDCO's chairman and founder of Grotech Capital Group, a venture-capital firm in Timonium.
Already, promising new companies likely to share the first round of investment have been narrowed to a short list, though Adams couldn't say what companies were on it.
"The funding initiative will be a significant boon to early-stage health care companies in Maryland," said a statement yesterday from Gov. Robert L. Ehrlich Jr.'s press office. A spokeswoman declined to comment further, saving the details for today's news conference at the State House in Annapolis.
A spokesman for Johnson & Johnson, Jeffrey J. Leebaw, declined to talk as well: "There's really nothing more that we can convey at this point - or wish to convey at this point - in advance of the press conference," he said.
TEDCO has largely operated as an investment arm of the state's Department of Business and Economic Development.
TEDCO steps in to fill the financing gap that exists between the risky stages of "new idea" and "proven prototype" where more typical funding sources - such as venture capitalists - often fear to tread. The state fund was named the most active investor nationwide in very early stage companies by Entrepreneur Magazine in 2003 and 2004 even though its budget is in the $6 million range.
"One of the things that TEDCO is particularly good at is leveraging the funds that we get from the state with other matching funds," Adams said, "For every dollar the state gives us, we find another 30."
What the organization hadn't found, Adams said, was a corporate partner that would use TEDCO as an investment source and "trust [its] due diligence to the point where they would put money behind us."
TEDCO pitched the Maryland investment partnership to several companies. After a year of discussion, Adams said, Johnson & Johnson signed on.
"We've reached out to pharma and other tech-oriented corporations and made them aware of what's going on in Maryland," Adams said. "We think this is going to be the first of several initiatives."