University Gap Fund and Accelerator Programs: Conversations with Leaders Series: Maryland Momentum Fund
Jacob Johnson
innovosource | Research Institution Proof of Concept, Startup Accelerators, Venture Funds | Collab Venture + Corporate Innovation
We asked the same five questions to 30 leading gap fund and accelerator programs to support active and developing university programs.
Over the past 20 years, these innovation and investment programs have supported translational research, proof of concept, and development of promising research institution technology and startups.
How would you describe the need for gap funding/accelerator programs to someone outside of the university tech commercialization/innovation community?
We at the Maryland Momentum Fund see many great technologies in the research lab and business ideas. Still, it can take companies a very long time from creating an idea or a pilot product to getting to market. Are feasibility studies required? What testing is needed? What are the intellectual property and regulatory issues? Particularly in the life sciences space, it can take years from patent to commercial viability. Programs that help move technologies and businesses along in that very early pre-seed or seed stage, where revenues are not clear, are still needed. Funding, advice, and expertise, and that windy pathway are critical --- otherwise, the technologies and companies may flounder and not see the light of day.
Briefly describe the gap funding or accelerator program(s) that you have put in place to address this need?
Launched in 2016 with a $10 million commitment from the University System of Maryland (USM), the Maryland Momentum Fund invests in USM-affiliated companies to:
1. Catalyze investment in early-stage start-ups in Maryland and providing funding alongside other sources of private capital
2. Generate financial returns for reinvestment in future start‐ups
3. Accelerate the success of USM start‐ups and provide a bridge to larger financings
4. Expand economic development in the State of Maryland
5. Recruit and retain innovative students and faculty in the State of Maryland
6. Support the development of the innovation ecosystem in key sectors and USM centers of excellence
The USM Maryland Momentum Fund is a pre-seed to late-seed stage investment fund that helps promising early-stage companies bridge from grant funding and angel investment to a Series A round of investment.
What are the major challenges that you have experienced thus far and how have you addressed these in your program(s)?
We are a public institution that also needs to be nimble and make reasonable private sector type risks. We have addressed this in various ways, including creating an external advisory board to advise on investments and an internal executive committee that provides operating guidance and a public sector lens to final decisions. We also have developed operating principles in consultation with experts and shared best practices with peer public investors.
What are you most proud of [in relation to your program(s)]? What is a meaningful impact to you?
The Momentum Fund is aptly named -- a critical impact is momentum. We require at least a one for one math for every investment we make. Thus far, for every $1 we have invested, other investors have invested $4. In some cases, our commitment is the first in a round, catalyzing investment and generating momentum for the company to bring in other investors. In others, the funding is the critical last piece, continuing their momentum and allowing them to shift more focus to building the business and meeting milestones rather than fundraising. In all cases, we have not only impacted the company through our funding but catalyzed additional investment of capital and other resources that investors bring to the table.
What is one piece of advice to your university peers that are either launching or developing gap funding and accelerator programs of their own?
Ensure that you understand and focus on the gap that you want to address. Then create documents, processes, and key guiding principles early. Allow for flexibility to test what works and doesn't and adjust. Let's work together and share best practices.