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Pre-Seed
Request for no more than an initial $250k investment from the State
Criteria
1. Must be a corporation
2. Information Required
- Structure of basic business plan including some information on most elements (i.e.
financials, market segment , etc.)
- IP strategy outlined and some evidence of initiation of that strategy
- Use of funds indicating appropriate application to advance IP strategy, business
model
- Clear commercialization and business development milestones (12 month timeline)
identified, including expected date to achieve and responsible party
- Proof of Concept (POC) or technology validation by a credible independent, objective
reviewer. (i.e. Federal program, academy, university, industry, publications, etc.)
- May have no equity and no more than $500k in equity raised
- Must have commitment that RCIC will incubate or oversee incubation by others to
include providing a plan on how they are going to incubate the project
- Use of funds spelled out at multiple investment levels. Note: Applicant to provide 3
scenarios for use of funds with projected milestones that will be accomplished with
each level of investment.
1. Low level ($100k)
2. Mid level ($175k)
3. High level ($250k)
“Fast-tracking” pre-seed deals
Pre-seed deals are put on the “consent agenda” at the quarterly ETF Committee meeting if the following occurred at the ETF Applicant Presentation Day:
1. Three or more reviewers from the ETF Committee
2. At least two from outside the region
3. Unanimous agreement to recommend project to leadership
Note: The consent agenda means that the company is listed on the quarterly Committee meeting agenda as ”pre-approved;” however, any Committee member can pull it off the pre-approved list for full discussion and voting by the whole Committee. Therefore, “fast-tracked deals are still subject to potential review by the full Committee and are always subject to due diligence and final review by the leadership.
Pre-seed deal post-award
- The “qualifying financing transaction” period is extended to 30 months
the amount of the “qualifying financing transaction” is equal to, at a minimum,
the amount of the award.
- The amount of the “qualifying financing transaction” is equal to, at a minimum, the
amount of the award.
- Milestone funding: After initial milestones are met, pursuant to the contract,
the pre-seed company may request additional funds to further the development
of “next stage” commercialization milestones up to $250K. This “next stage”
milestone funding process can be repeated by the company up to a total project
funding of $1,000,000.
Note: A $1,000,000 reserve will be held for each pre-seed project awarded by the leadership. The reserves availability to the project will be determined by the achievement of the “next stage” milestones and compliance with contractal agreement. After receiving a pre-seed award by the Leadership for a set amount, each subsequent payment will not require additional Leadership “consensus” approval but will be made in accordance with the contractual terms
A note of “fast-tracking”
- Only pre-seed deals can be fast-tracked
- Therefore, any request over $250k cannot be fast-tracked
- A unanimous vote of three or more Committee members can still decline an
applicant
- Declined applicants appear on the quarterly Committee meeting agenda as declined
for documentation purposes, but they cannot be brought up for
reconsideration by the Committee
Use of Convertible Debt as Investment Tool
- The first $500K of investment (assuming milestone achievement) will be award as a
Convertible Debt investment from the State of Texas.
- Upon additional funding within the 30 month window, the debt will convert to
equity using the 20/20 Equity Model (e.g. If the state invests first they get a
20% better deal)
- There will also be an 8% interest associated with the Convertible Debt
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