Venture capital to local companies on the rise -- Gazette.Net







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Local businesses have seen needed venture capital and loans in greater abundance in recent months.

The amount of venture capital investment funneled to Montgomery County and Washington-area companies in 2013’s first quarter jumped by 30 percent from the same period a year ago, according to a recent report.

The $286.3 million invested in local companies in the first three months was the most in the quarter in five years, according to the report from PricewaterhouseCoopers LLP and the National Venture Capital Association, based on data by Thomson Reuters.

Meanwhile, several local banks and credit unions have increased another source of key funding for small businesses — loans. For example, Bethesda-based Eagle Bank grew its portfolio of commercial and industrial loans by 21 percent in 2012 from 2011 to $600.7 million, and its loans of less than $1 million in that sector rose by $12 million, according to the Federal Deposit Insurance Corp.

Germantown-based Mid-Atlantic Federal Credit Union has seen its business lending program grow to the point that it hosts regular events geared toward small businesses. A seminar is slated for May 22 at the Universities at Shady Grove in Rockville involving local entrepreneurs who will relay advice on growing small companies.

Montgomery area one of few to see VC rise

In the venture capital report, the Montgomery-D.C. region was one of the few across the country to see an increase in the first quarter. Even Silicon Valley in California declined by 3 percent in the first quarter. Nationally, venture capital slipped by 6 percent to $5.9 billion.

Less money is going into capital-intensive sectors such as biotechnology and clean technology — key areas in Montgomery and Frederick counties — and more in the information technology sector, which is viewed as more capital efficient, said John Taylor, head of research for the National Venture Capital Association.

“The venture industry has been raising less capital than it has been investing now for several years, and ultimately this dynamic flows through and manifests itself in lower investment levels overall,” Taylor said.

One of the biggest financing rounds in Montgomery so far this year was by FiberZone Networks of Bethesda. The company raised $8 million in a recent round of financing led by Novak Biddle Venture Partners, according to a news release.

FiberZone makes technological products used to connect fiber-optic lines that transmit data through the Internet and phone lines. The products do not rely on electricity and thus are not susceptible to failure during power outages. Company officials could not be reached for comment.

Gaithersburg regenerative medicine company Cytomedix raised $5 million in equity in the first quarter, with millions more in financing commitments. The state-run Maryland Venture Fund, which has been boosted by the InvestMaryland program, contributed $500,000 to Cytomedix.

The fund also gave $300,000 to Adlyfe, a Rockville biotech developing diagnostic tests for the early detection of Alzheimer’s disease and other degenerative brain conditions.