# COMAR Title 14 — Independent Agencies ## Subtitle 04 — Maryland Technology Development Corporation ### Chapter 05 — Seed Funds **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 .05B amended effective February 21, 2022 (49:4 Md. R. 302); January 20, 2025 (52:1 Md. R. 19) #### Regulation .01 Purpose. *COMAR 14.04.05.01* These regulations prescribe the objectives and investment policy of the Seed Funds, the eligibility requirements and criteria for investment by the Seed Funds, and procedures and guidelines for TEDCO’s investment in early-stage businesses. #### Regulation .02 Objective. *COMAR 14.04.05.02* Through Seed Funds investment, TEDCO seeks to strengthen and grow early-stage technology-based businesses with the goal of creating a State-wide environment that encourages and supports emerging businesses and maximizes economic impact in the State. #### Regulation .03 Definitions. *COMAR 14.04.05.03* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Cybersecurity Investment Fund” means the investment program established by §10-464 of the Act. (2) “GAP Fund” means the investment program established in accordance with the Act to make investments in businesses between seed-stage and venture investment. (3) “Life Science Investment Fund” means the investment program established in accordance with the Act to make investments in businesses that develop products for commercialization which address human health and require approval from the United States Food and Drug Administration. (4) “Seed Funds” means the Life Science Investment Fund, the Cybersecurity Investment Fund, the Technology Commercialization Fund, and the GAP Fund. (5) “Technology Commercialization Fund” means the investment program established in accordance with the Act to make investments in businesses that develop and commercialize new technology-based products in all fields of technology. #### Regulation .04 Investment Philosophy and Types of Qualified Businesses. *COMAR 14.04.05.04* TEDCO seeks investment opportunities in early-stage technology-based businesses with demonstrable potential to secure next-stage investment and grow with a positive economic impact in the State. #### Regulation .05 Eligibility. *COMAR 14.04.05.05* A. In General. TEDCO shall be satisfied that the applicant meets the requirements under COMAR 14.04.02.04. In addition to the requirements set forth in COMAR 14.04.02.04, TEDCO shall be satisfied that the business is based on the validation of a minimum viable product or, in the case of life sciences, proof of concept data with validation from in vitro or in vivo models or patient samples. B. Eligibility for Specific Seed Funds. (1) For Technology Commercialization Fund investments, at the time of the application and initial investment, the business: (a) Has raised not more than $10,000,000 of dilutive funding, not including the investment; and (b) Employs not more than 30 employees. (2) For Cybersecurity Investment Fund investments, the business: (a) Shall be focused on information technology security, including the protection of networked devises, networks, programs, and data from unintended or unauthorized access, change, or destruction; and (b) At the time of the application and initial investment: (i) Has raised not more than $10,000,000 of dilutive funding, not including the investment; and (ii) Employs not more than 30 employees. (3) For GAP Fund investments, the business: (a) Shall have secured verifiable funding commitments from non-government sources for a $1:1 ratio match to TEDCO’s investment, the receipt of which by the business shall be a condition of closing the TEDCO investment; (b) Shall receive the non-governmental source of funding specified in §B(3)(a) of this regulation not more than 90 days before TEDCO’s investment and in connection with the same financing round in which TEDCO invests; and (c) Shall use the proceeds from TEDCO’s investment for payroll to compensate new employees in the State hired by the applicant after or not more than 90 days before TEDCO’s release of the investment proceeds; and (d) At the time of application and initial investment: (i) Has raised not more than $10,000,000 of dilutive funding, not including the investment; and (ii) Shall employ not more than 30 employees. (4) For Life Science Investment Fund: (a) The business shall be considered an early-stage business if the business submits an application for investment to TEDCO: (i) Not more than 7 years after the date on which the business commenced operations or not more than 5 years after the date on which the business received its final approval from the United States Food and Drug Administration for the product or device the business is developing, whichever is later; and (ii) Otherwise meets the requirements of an early-stage business; (b) The business shall be in the process of developing a technology for a product for human health that requires approval from the United States Food and Drug Administration prior to market; and (c) At the time of the application and initial investment, the business: (i) Has raised not more than $10,000,000 of dilutive funding, not including the investment; and (ii) Employs not more than 30 employees. #### Regulation .06 Investment Criteria. *COMAR 14.04.05.06* In addition to the investment criteria set forth in COMAR 14.04.02.05, TEDCO shall consider whether: A. The market opportunity is appropriate for a seed-stage investment; B. The applicant has the potential to secure institutional venture capital from other investors; and C. The management team has the skills and ability to effectively secure an institutional venture investment. #### Regulation .07 Procedures and Guidelines for Investment Decisions. *COMAR 14.04.05.07* A. In General. Except as provided in §§B and C of this regulation, TEDCO shall select businesses for investment by the Seed Funds in accordance with the application process set forth in COMAR 14.04.02. B. Reapplication after Initial Rejection. If TEDCO rejects a business for investment by the Seed Funds after the business submits a first application to TEDCO, the business may re-apply to TEDCO upon the later of: (1) 90 days after the date on which TEDCO issues a written rejection to the business; or (2) The business’s consultation with TEDCO’s advisory services, if required by TEDCO, and satisfaction of any recommendations by TEDCO. C. Reapplication after Subsequent Rejection. If TEDCO rejects a business for investment by the Seed Funds any time after the business submits a second application to TEDCO, the business may re-apply to TEDCO upon the later of: (1) 180 days after the date on which TEDCO issues a written rejection to the business; or (2) The business’s consultation with TEDCO’s advisory services, if required by TEDCO, and satisfaction of any recommendations by TEDCO.