Public Agency Boosts Small High-tech Firms

 

For Jack Rennie, president of Pacer Systems Inc. in Burlington, Mass., the Massachusetts Technology Development Corp. was like a gift from heaven. MTDC recently extended the company a $200,000 unsecured seven-year loan at 15% interest." The money helped us to attract co-venturers and allowed us to more than double our capital coming in," says Rennie, whose 200-employee firm manufactures aviation equipment. "That makes a tremendous difference for a company growing at a 35% compound rate."

An independent public agency created by the state legislature in 1978, MTDC extends easy-term credit and financial counseling to small, technology-based companies that, says MTDC president William F. Aikman, "cannot attract a sufficient amount of capital on their own."

Through May 1981, MTDC had invested in eight companies. Loan amounts range between $100,000 and $250,000 and interest rates from 10% to 16%. The agency also co-ventures with private banks and venture capital firms. The $1.85 million invested to date has been joined by $5.87 million in private capital.

Instead of providing its own funds, MTDC sometimes offers financial packaging assistance to help steer companies to private sources of capital. "The last thing we want to do is displace private investors," says Aikman.

This year MTDC received $1.19 million from the state and $1 million from the Commerce Department's Office of Productivity, Technology, and Innovation. At least two other states -- Maine and Alaska -- have established their own versions of MTDC, and four others are working to set up organizations based on the MTDC formula.