# COMAR Title 14 — Independent Agencies ## Subtitle 04 — Maryland Technology Development Corporation ### Chapter 03 — Pre-Seed Builder Fund and Inclusion Fund **Authority:** Economic Development Article, §10-409, Annotated Code of Maryland **Administrative History:** Effective date: December 30, 2019 (46:26 Md. R. 1167) **Administrative History:** Regulation .01 amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .02 amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .03B amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .04 amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .05B, C amended effective February 21, 2022 (49:4 Md. R. 302) **Administrative History:** Regulation .06 amended effective February 21, 2022 (49:4 Md. R. 302) #### Regulation .01 Purpose. *COMAR 14.04.03.01* These regulations prescribe the objectives and investment policy of the Pre-Seed Builder Fund and the Inclusion Fund, the standards for qualification and investment criteria for participation in the Pre-Seed Builder Fund and the Inclusion Fund, and procedures and guidelines for TEDCO’s selection of businesses to receive Pre-Seed Builder Fund and Inclusion Fund investment. #### Regulation .02 Objective. *COMAR 14.04.03.02* The objective of the Pre-Seed Builder Fund is to make pre-seed investments in and to support the development of technology-based start-up businesses owned and managed by individuals who demonstrate economic disadvantage. The objective of the Inclusion Fund is to make investments in technology-based businesses that have grown since their pre-seed stage and are owned and managed by individuals who demonstrate economic disadvantage. #### Regulation .03 Definitions. *COMAR 14.04.03.03* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Executive support” includes assistance in and support for management and implementation, planning, tracking and analysis, networking support, mentoring, coaching, advisory, facilitation, instruction or observation and feedback provided to a business. (2) “Inclusion Fund” means the program established by §§10-481—10-483 of the Act. (3) “Pre-Seed Builder Fund” means the program established by §10-486 of the Act. #### Regulation .04 Investment Philosophy and Types of Qualified Businesses. *COMAR 14.04.03.04* The Pre-Seed Builder Fund and Inclusion Fund each identify investment opportunities in businesses that are often overlooked by traditional sources of investment and financing because of economic disadvantage and seek to invest in early-stage technology-based businesses that have the potential, with the Pre-Seed Builder Fund investment, the Inclusion Fund investment, or other TEDCO services, to create jobs in the State and become attractive targets for follow-on financing or investment. #### Regulation .05 Eligibility. *COMAR 14.04.03.05* A. In General. TEDCO shall be satisfied that the applicant meets the eligibility requirements set forth in COMAR 14.04.02.04. B. Eligibility Requirements Specific to Pre-Seed Builder Fund. In addition to the requirements set forth in COMAR 14.04.02.04, TEDCO shall be satisfied that: (1) At the time of TEDCO's investment, at least one owner or executive manager who has demonstrated economic disadvantage works at the applicant full-time; (2) At the time of TEDCO's investment, at least 50 percent of the applicant is owned by one or more individuals who have demonstrated economic disadvantage; and (3) If required by TEDCO, the founders, owners, managers, or officers agree to receive executive support. C. Eligibility Requirements Specific to Inclusion Fund. In addition to the requirements set forth in COMAR 14.04.02.04 and §B(1) and (3) of this regulation, TEDCO shall be satisfied that: (1) At the time of TEDCO's investment, at least 30 percent of the applicant is owned by one or more individuals who have demonstrated economic disadvantage; and (2) For at least 1 year after the time of TEDCO's investment, the applicant is controlled and managed by one or more individuals who have demonstrated economic disadvantage. #### Regulation .06 Procedures and Guidelines for Investment Decisions. *COMAR 14.04.03.06* A. In General. Except as provided in §§B and C of this regulation, TEDCO shall select businesses for investment by the Pre-Seed Builder Fund or the Inclusion Fund in accordance with the application process as set forth in COMAR 14.04.02. B. Investment Criteria. (1) In addition to the investment criteria described in COMAR 14.04.02.05, the following investment criteria shall form the basis of TEDCO’s determination of the applicant’s potential to attract subsequent financing or investment after participating in the Pre-Seed Builder Fund or the Inclusion Fund and to create jobs in the State: (a) Whether the applicant has or does not have available to it other means of financing; and (b) Whether the applicant has secured, through verifiable documentation: (i) Expressions of interest in providing financing to the applicant from sources of institutional venture investment or other financing sources, based on specified milestones; or (ii) Network opportunities, including introductions to customers, employees, and partners. (2) TEDCO shall use the investment criteria to evaluate applicants to determine: (a) Whether an applicant advances in the application process; and (b) The extent to which the achievement of milestones determined by TEDCO or the receipt of executive support will be a condition of investment by the Pre-Seed Builder Fund or Inclusion Fund. (3) TEDCO may require: (a) Eligible applicants to interview with TEDCO program staff; and (b) Finalists for investment to make in-person presentations to TEDCO program staff. C. Re-application After Initial Rejection. If TEDCO rejects a business for investment by the Pre-Seed Builder Fund or by the Inclusion Fund after the business submits a first application to TEDCO, the business may re-apply to TEDCO upon the later of: (1) 120 days after the date on which TEDCO issues a written rejection to the business; or (2) The satisfaction of recommendations by TEDCO, if any. D. Re-application After Subsequent Rejection. If TEDCO rejects a business for investment by the Pre-Seed Builder Fund or by the Inclusion Fund any time after the business submits a second application to TEDCO, the business may re-apply to TEDCO upon the later of: (1) 1 year after the date on which TEDCO issues a written rejection to the business; or (2) The satisfaction of any recommendations by TEDCO, if any.