# COMAR Title 14 — Independent Agencies ## Subtitle 04 — Maryland Technology Development Corporation ### Chapter 02 — Investment Programs **Authority:** Economic Development Article, §§10-409 and 10-4A-27, Annotated Code of Maryland **Administrative History:** Effective date: December 30, 2019 (46:26 Md. R. 1167) **Administrative History:** Regulation 03 amended effective July 8, 2024 (51:13 Md. R. 647) **Administrative History:** Regulation 04 amended effective September 18, 2023 (50:18 Md. R. 800) **Administrative History:** Regulation .04A amended effective January 20, 2025 (52:1 Md. R. 19) **Administrative History:** Regulation .05B amended effective February 22, 2021 (48:4 Md. R. 178); September 18, 2023 (50:18 Md. R. 800) **Administrative History:** Regulation .05D amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .06B amended effective September 18, 2023 (50:18 Md. R. 800) **Administrative History:** Regulation .06B, C amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .09 amended effective February 21, 2022 (49:4 Md. R. 302) #### Regulation .01 Purpose. *COMAR 14.04.02.01* Except as otherwise provided in this subtitle, these regulations prescribe the policies and procedures applicable to all TEDCO investment programs. #### Regulation .02 Objective. *COMAR 14.04.02.02* The objective of TEDCO’s investment programs is to foster the growth of early-stage technology-based businesses in the State. #### Regulation .03 Investment Philosophy and Types of Qualified Business. *COMAR 14.04.02.03* TEDCO seeks and makes investments that align the objectives of economic development in the State and return on investment. The balance of these objectives varies from investment program to investment program. Except for follow-on investments and for all investments under COMAR 14.04.09, TEDCO’s investments are limited to early-stage technology-based businesses. #### Regulation .04 Eligibility. *COMAR 14.04.02.04* A. Eligibility Criteria. Except as provided in §C of this regulation, TEDCO may invest in an applicant if TEDCO determines the applicant meets all of the following criteria: (1) The applicant is a technology-based business; (2) Except for applicants applying for investment under COMAR 14.04.09, over half of the applicant’s workforce works at and from a physical location in the State; (3) An applicant’s principal business operations are conducted from a physical location in the State; (4) The applicant agrees to execute a securities repurchase agreement or an equivalent commitment, each with a duration of five years, subject to the terms and in the form approved by the Office of the Attorney General; (5) The applicant agrees to use the investment primarily to: (a) Support business operations in the State; or (b) In the case of a start-up business, establish and support business operations in the State; (6) The applicant employs not more than 250 employees; (7) The applicant is not primarily engaged in retail sales, real estate development, insurance, banking, or lending; (8) The applicant is not primarily engaged in the provision of professional services by accountants, attorneys, or physicians; and (9) Other eligibility criteria for each investment program under COMAR 14.04.03—.06 and.09; B. Qualified Business Information. Except as required under §C of this regulation, in order to be considered for an investment by TEDCO, an applicant shall submit to TEDCO a written application in accordance with Regulation .05 of this chapter with sufficient information for TEDCO to establish eligibility under §A of this regulation, including: (1) Except for applicants applying for investment under COMAR 14.04.09, the total number of the applicant’s founders and employees and the number of the applicant’s founders and employees working in the State; (2) The address of the applicant’s principal business operations in the State and a copy of the lease, license agreement, deed, or other document that evidences the applicant’s right to occupy the physical location of the principal business operations; (3) Addresses of all the physical locations of the applicant; and (4) Any other information required by TEDCO as necessary to establish that the applicant is a qualified business. C. Substantial Economic Impact Information. In lieu of the information provided in §B(1)—(3) of this regulation, the applicant may submit to TEDCO information that the applicant’s business will have a substantial economic impact in the State as set forth in COMAR 14.04.07. After reviewing information submitted by an applicant under this section, TEDCO may request additional information or conduct its own investigation of the applicant’s potential for substantial economic impact in the State. In its sole discretion, TEDCO may submit information provided under this section to the Investment Committee for its consideration. This section does not apply to applicants applying for investment under COMAR 14.04.09. D. Verification of Information Submitted to TEDCO. An applicant shall verify, in a form approved by the Office of the Attorney General, the information the applicant submits to TEDCO in an application for an investment. E. State Small Business Credit Initiative Funds. All investments using proceeds allocated under the federal State Small Business Credit Initiative shall comply with 12 U.S.C. 5701 et seq., as amended. #### Regulation .05 Procedures and Guidelines for Investment Decisions. *COMAR 14.04.02.05* A. In General. In its sole discretion, TEDCO shall select eligible applicants for investment based on a written application and investment diligence. Each investment program shall have a separate application, application process, and submission deadlines. B. Application Process. (1) In General. TEDCO shall make available to the public on or through its website: (a) An application process for each investment program; and (b) Deadlines, if any, to submit applications to an investment program. (2) Required Information. Through an application, an applicant shall provide information sufficient for TEDCO to: (a) Determine whether the applicant meets the eligibility requirements as set forth in the Act and the specific requirements of the applicable investment program set forth in COMAR 14.04.03—.06 and .09; and (b) Evaluate TEDCO’s investment criteria and, if applicable, diversity and inclusion criteria under §B(5) of this regulation. (3) Preliminary Evaluation of Eligibility. TEDCO’s investment program staff: (a) Shall perform an initial review of each application in accordance with the Act and Regulation .04 of this chapter; and (b) May review the application for investment criteria in accordance with this regulation and may examine the applicant’s books and records, business plan, and other business documents. (4) Eligibility Determination. Within 30 days from the date an applicant submits the application to TEDCO, TEDCO shall notify the applicant if TEDCO finds the applicant ineligible for investment under Regulation .04 of this chapter. (5) Investment Criteria, Diversity and Inclusion Criteria, and Diligence for all Investment Programs. (a) If the applicant is eligible for investment by TEDCO, TEDCO shall consider the investment criteria as set forth in §B(5)(b) of this regulation and diversity and inclusion criteria as set forth in §B(5)(c) of this regulation and shall conduct diligence as set forth in §B(5)(d) of this regulation. (b) Investment Criteria. TEDCO shall use the following investment criteria as the basis of a scoring rubric to evaluate eligible applicants: (i) The growth potential of the applicant based on a credible and sustainable business model; (ii) The degree to which the applicant’s proposed product or service addresses a need in the market and brings value to customers; (iii) Size of the total addressable market for the applicant’s product or services; (iv) The analysis of competitors in the market and sustainability of the applicant’s competitive advantage; (v) The strength of the applicant’s management team including the team’s technical competence, entrepreneurial experience, business experience, and ability to grow the business; (vi) The potential of the applicant or the applicant’s management team, as applicable, to raise follow-on capital, increase revenues, and create jobs; (vii) Stage of development for product or services including market testing, customer discovery, and scientific validation; (viii) The applicant’s plan to deliver product or services to the market including manufacturing, marketing, partnering and as applicable, regulation strategies; (ix) The amount of funds the applicant has raised as of the date of application; (x) The applicant’s future financing plan including financial models, employment plan, strategic milestones, and capital needs; (xi) The applicant demonstrates a reasonable opportunity that TEDCO will receive a positive return on its investment; (xii) The applicant’s satisfaction of specific investment program criteria as specified under each investment program, as applicable; (xiii) The time period from which the business commenced operations; and (xiv) Adherence to the application process. (c) Diversity and Inclusion Criteria. TEDCO shall consider whether: (i) The investment has the potential to result in a positive economic development impact for a region or an area which is economically distressed or a rural area or a rural community; and (ii) A founder of the applicant or a member of the applicant’s executive leadership has self-identified as a member of a group that is economically disadvantaged. (d) Diligence. TEDCO’s investment diligence may include: (i) Review of the applicant’s books and records and business plan; (ii) One or more site visits; (iii) Discussion with customers and competitors; (iv) Evaluation of intellectual property; (v) Independent review of scientific data; (vi) Validation of claims and assumptions made in the application; and (vii) At TEDCO’s sole discretion, an applicant’s presentation and interview. (6) Follow-On Investments. To the extent that TEDCO already has information and documents to evaluate eligibility and investment criteria for a follow-on investment, TEDCO may accept a follow-on investment application requiring only the additional information and documents TEDCO needs to make the determinations under §B(2) of this regulation. At the time of the follow-on application and investment, TEDCO shall reconfirm the business’s eligibility as required under this regulation. All information determining eligibility of the business shall be verified as provided under Regulation .04D of this chapter. C. Scoring. TEDCO shall score each applicant in accordance with a uniform scoring rubric adopted for each investment program based on the investment criteria and diversity and inclusion criteria. D. Final Approval. The Chief Executive Officer, in the Chief Executive Officer’s sole discretion, shall base TEDCO’s final decision regarding an investment in an eligible applicant on: (1) The application; (2) The aggregate scores from the evaluation of investment criteria and diversity and inclusion criteria under §C of this regulation; (3) The relative strength of the applicant in comparison to other applicants; (4) The likelihood that the investment in the applicant will lead to economic growth in the State; (5) The amount of money available for the specific TEDCO investment program from which the investment will be made; and (6) An analysis of the potential of the investment in the applicant to positively impact economically disadvantaged individuals, economically distressed areas or regions, or rural areas or rural communities. E. Closing Conditions. After final approval, TEDCO may release the funds to invest in an applicant if the following closing conditions are met: (1) At the time of the investment, the applicant remains eligible; (2) The applicant executes a securities repurchase agreement or an equivalent commitment as set forth in Regulation .04 of this chapter before the receipt of the investment proceeds; (3) The applicant agrees to use the proceeds of the investment to establish and support operations in the State and in accordance with any requirements of the applicable investment program; and (4) The applicant satisfies other closing conditions as required by the Office of the Attorney General and other terms and conditions that TEDCO, in its sole discretion, may require. F. Rejected Applicants. If an applicant is rejected for an investment, TEDCO shall notify the applicant in writing. #### Regulation .06 Amount of Money Available for Investment. *COMAR 14.04.02.06* A. In General. The amount of money available for investment shall vary from investment program to investment program. B. Amount for Each Investment Program. (1) Pre-Seed Builder Fund and Inclusion Fund. TEDCO may make an investment of up to $500,000 in each business selected for participation in the Pre-Seed Builder Fund or the Inclusion Fund. (2) Rural Business Innovation Initiative Program. TEDCO may invest up to $25,000 per investment. (3) Seed Funds. TEDCO may invest: (a) For Cybersecurity Investment Fund and Technology Commercialization Fund, up to $500,000 per investment; (b) For the Life Science Investment Fund, up to $500,000 per investment; and (c) For the GAP Fund, up to $750,000 per investment. (4) Maryland Venture Fund. TEDCO may invest $250,000 to $1,500,000 per investment. (5) Maryland Equity Investment Fund. TEDCO may invest up to $2,000,000 per investment. C. Exceptions. (1) The Board may increase or decrease the investment cap described in §B of this regulation at the request of the Chief Executive Officer and in accordance with any limitations of the appropriation. (2) If the Board modifies an investment cap under §B of this regulation in accordance with this §C of this regulation, TEDCO shall publish the modified investment cap on its website.. #### Regulation .07 Inclusive and Diverse Entrepreneurship — All Investment Programs. *COMAR 14.04.02.07* In order to foster inclusive and diverse entrepreneurship and innovation throughout the State, including initiatives to raise awareness of investment programs to assist small minority and women-owned businesses, TEDCO shall: A. Establish bench-marks for diversity and inclusion for each investment program; B. Provide in the application process an opportunity for applicants to self-identify economic disadvantage; C. Consider historical data on investments in comparison to the bench-marks; and D. Develop outreach marketing targeted to economically disadvantaged groups in the State. #### Regulation .08 Nondiscrimination. *COMAR 14.04.02.08* An applicant shall comply with all applicable federal, State, and local laws regarding discrimination and equal opportunity in employment. #### Regulation .09 Investment Program Administration. *COMAR 14.04.02.09* An action or decision required or permitted to be taken or made by TEDCO under the Act or these regulations, including execution of equity financing documents, may be taken by the Chief Executive Officer or Chief Executive Officer’s designee.