Md. Code Regs. 14.04.02.05

Current through Register Vol. 51, No. 24, December 2, 2024

Section 14.04.02.05 - Procedures and Guidelines for Investment Decisions

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.

Md. Code Regs. 14.04.02.05

Regulation .05 adopted effective 46:26 Md. R. 1167, eff. 12/30/2019; amended effective 48:4 Md. R. 178, eff. 2/22/2021; amended effective 49:4 Md. R. 302, eff. 2/21/2022; amended effective 50:18 Md. R. 800, eff. 9/18/2023