In a recent column on reversing Baltimore’s population slide, I suggested that the city, starting with its mayor, devote time each year to pitching college students on staying after graduation and launching their careers here. Two weeks later, the Wall Street Journal named Baltimore one of the nation’s three best cities (Pittsburgh and Salt Lake were the other two) for college grads.
“Its size and concentration of tech job postings make it the country’s eighth-largest tech hub,” the Journal said, citing an analysis by Indeed.com. “And while its median tech wage of $98,000 comes close to Washington’s $106,000, median rents are 20 percent less in Baltimore, according to real estate site Trulia.” The Journal also pointed out that, while the city’s population has declined — a trend having as much to do with household size as with quality-of-life factors — the number of college-educated people between 25 and 34 has been rising.
So, to some extent, it’s happening already. But what would keep more graduates in Baltimore, especially those headed to the tech frontier? A lot of people in universities and incubators have been working on making the city an East Coast tech hub, and we’ve heard some grandiose optimism about that over the years. To employ a term commonly used by innovators and their financial backers, what does Baltimore need to “bring it to scale”?
Consider Relavo. That’s the name of a company started by Johns Hopkins University students — not alumni, not doctoral candidates, but undergraduates — who have developed a disposable device that reduces the risk for contamination during at-home kidney dialysis. According to the Hub, the Hopkins news website, a group of biomedical engineering students figured out a way to keep people with kidney disease from getting peritonitis, an infection that often requires hospitalization and can cause death. Relavo’s PeritoneX disinfects common contamination points and reduces the chance of infection. The students so far have raised $25,000 in various prizes and grants.
I don’t know if PeritoneX ever gets to market. But I cite it as an example of the kind of development that happens at Hopkins all the time. It’s one of the busiest places on the planet. Various incubators, across its nine schools, have produced hundreds of new technologies and patents, new commercial startups and not-for-profit “social-impact companies.” Each year, the university supports several student ventures like Relavo.
“Hopkins startups have raised $2.5 billion since 2010,” says Christy Wyskiel, who oversees the incubator systems for the university. “In the first half of this decade, Hopkins startups were raising under $100 million annually, and half of the annual raises were to companies based outside of Maryland. In the past five years, we averaged nearly $400 million annually and two-thirds of the raises have been to companies located in and around Baltimore.”
With that kind of activity, plus what’s already in place in the private sector and our state universities, you might wonder why Baltimore isn’t a bustling tech hub already.
It’s getting there. Three cybersecurity companies plan to open headquarters in Port Covington next year, and their executives think other companies will follow them to what they’ve dubbed “Cyber Town USA,” making it, potentially, the epicenter of a Silicon Valley of the East Coast.
But locally-grown innovators — the focus of this column — need capital to scale up and, just as importantly, expert advice in getting established and growing.
Anders Jones, the 32-year-old CEO and co-founder of Facet Wealth, a financial services company based in Harbor East, brought his startup to Baltimore after he spent a decade in Silicon Valley. Facet has attracted $37 million in venture capital. The company targets a huge and underserved market of wage-earners who get tech-enhanced “financial life management” for a flat fee. The company is growing. It has 60 employees and, Jones says, he gets about 300 applications for every job opening.
“We chose Baltimore because we wanted to maximize our chance for success to build a financial services technology company,” he says. “Baltimore has a unique mix of technical talent coming out of Hopkins, the University of Maryland, UMBC, and various legacy tech companies. And it has financial services talent, T. Rowe and Legg Mason. Our cost structure here is about a third what it would be if we had stayed in San Francisco. And we're excited to show that it's possible to create a meaningful company, with high-tech jobs, in Baltimore, and that all unicorns don't have to come from Silicon Valley.”
Jones does not agree with those who say lack of capital keeps promising startups, like some of those generated in the Hopkins incubators, from staying in Baltimore. “I think the reason people leave is not because of the money, but because of the expertise,” he says. “If you’re a 23-year-old who just graduated from Hopkins and raised a couple million bucks, and you’ve got some traction, what do you do next? There aren’t that many people around here who actually know how to [scale up], and that’s why people leave. It’s not a money thing, it’s a skills-and-experience thing. The ability to call someone up and have coffee with them in San Francisco and say, ‘I have this problem,’ [and] just talk you through how this works — that just doesn’t exist here.”
Time, Jones says, is the fix for that — more time to develop the so-called tech ecosystem, and time to attract more capital to the city. That’s something that needs to be pushed and Jones says he would be glad to introduce Silicon Valley investors to Baltimore companies showing promise. “We could absolutely organize a group of 10 venture capitalists to come here,” he said. (Did you hear that, Mayor Jack Young?)
“There’s a core engine of innovation [in Baltimore] that is cranking,” Jones adds. “And I think it’s pretty undervalued right now.”