Minority Business Pre-Seed Fund (MBPF)
The Minority Business Pre-Seed Fund (MBPF) was created through a partnership between TEDCO and Harbor Bank Community Development Corporation to addresses the needs of minority entrepreneurs in Maryland, who often lack access to the earliest stage of start-up capital known as the Friends and Family round. The MBPF program will make investments of up to $40,000 to help minority entrepreneurs take a technology-based idea or concept that represents a viable business opportunity and develop it into a product that can be tested with potential users. This funding will allow these entrepreneurs to reach a critical development milestone and advance their ideas further along the commercialization pathway, which could lead to follow-on investment, and ultimately, job creation. In addition to the funding, MBPF will require engagement with educational resources and mentoring associated with the program because money is only one of the many things needed to build a successful company. The knowledge gained from other successful entrepreneur mentors and from a structured educational program will help entrepreneurs minimize mistakes and take advantage of the variety of resources available at TEDCO, Harbor Bank Community Development Corp., and the wider community.
The Minority Business Pre-Seed Fund, which is currently a pilot program, is exclusively for African-American entrepreneurs in Maryland.
- Entrepreneurs may apply to the program, but a company will need to be formed prior to receiving an investment.
- Companies receiving an investment must have a principal place of business in Maryland. See the TEDCO Policy for more details.
- The idea must be at the concept or prototype development stage. Ideas for which the entrepreneur has already performed technology or market validation should consider applying directly to TEDCO’s Seed Investment Funds.
While most entrepreneurs need funding to develop their ideas, TEDCO’s Minority Business Pre-seed Fund is competitive and only the best ideas supported by a thoughtful commercialization plan will receive an investment. Evaluation criteria used for the review of MBPF applications include the following:
- Stage of development – full versus partial conception of product
- Proprietary nature of the idea – can competitors steal the idea
- Inventiveness of the idea
- Expertise in the field associated with the idea
- Clearly identified problem in the market that can be solved by the idea
- Significant advantages over the currently available solutions (competition)
- Size of the market opportunity
- Business model viability and scalability
- Partners, advisors, and other support accessed
Applicants should understand that the MBPF budget is limited and all good ideas cannot be funded. MBPF investments will be made to 2-3 applicants four times a year (a total of 10 investments per year). Since there will be more good ideas applying for the investment than there are funds to invest, the selection process will be very competitive. While an entrepreneur could submit a strong application, such an idea might not receive an investment if there are other entrepreneurs with stronger applications. While TEDCO and Harbor Bank CDC are not able to invest in all of the companies they see, they strive to make the process rewarding for all of its applicants by providing constructive feedback. To this end, entrepreneurs needing assistance will be directed to other useful resources so applicants can improve their application, their business concept, and/or their probability of achieving success.
TEDCO and Harbor Bank Community Development Corp. will make Investments of up to $40,000 (50% from TEDCO and 50% from Harbor Bank CDC) to advance an idea toward the development of a product. Investments are made in the form of a five-year, convertible note to the company. Interest will accrue on the note at a rate of 8% per annum. More information about the investment mechanism, the closing process, and the terms associated with an investment can be found HERE.
Applying for the Minority Business Pre-Seed Fund
It is easy to start the application process for the Minority Business Pre-Seed Fund. Entrepreneurs can simply use TEDCO’s on-line submission system to complete an application form. While an individual can apply for an investment, a company will need to be formed prior to receiving an investment. Applications for MBPF investment will be reviewed at four separate times each year. Application deadlines for each review cycle are:
McKeever (Mac) E. Conwell, II