The Morgan Stanley Multicultural Innovation Lab (MSMIL), an accelerator that helps startups led by women and people of color gain funding, has been named the first participant in the NJ Accelerate.
The New Jersey Economic Development Authority (NJEDA), which launched the NJ Accelerate, announced the partnership, one of the first times that a state has teamed up with a major financial company on such a program.
The accord comes as the MSMIL will expand its program starting in winter 2021 to typically invest $250,000 in such a startup, an increase from $200,000 in prior cohort companies. The new initiative is needful capital-wise. Black founders receive less than 1% of venture capital funds annually, and Black women founders account for less than that, the Harvard Business Review reports. The MSMIL is the first “approved accelerator” for the NJ Accelerate program, and the NJEDA expects to announce additional partakers in upcoming months.
The NJEDA started NJ Accelerate in 2020 to grow New Jersey’s innovation ecosystem by incentivizing accelerators to recruit participants and startups to reside in New Jersey after graduating from approved accelerators. An accelerator is a cohort-based “boot camp” for startups that offers educational and mentorship programs and provides connections to venture capitalists, angel investors, and corporate executives who can help early-stage companies grow. Many accelerators provide investment capital and office space as well.
NJEDA will provide program support as well as direct loans and rent support for businesses that relocate to or are based in New Jersey. Entrepreneurs from outside that state can apply if they meet minimum program criteria, which includes bringing at least 50% of their employees to operate in New Jersey. The NJEDA will match funding provided by the approved accelerator to startups up to $250,000.
The NJEDA is also exploring launching a Black and Latinx-focused Seed Fund, and a range of other initiatives designed to support diverse entrepreneurs and start-ups.
“New companies that scale and grow in New Jersey are one of the biggest drivers of long-term economic growth. Providing the support these businesses need to succeed is central to Governor [Phil] Murphy’s strategy for building a stronger, fairer New Jersey,” NJEDA CEO Tim Sullivan said in a news release.
“Connecting New Jersey-based companies with leading accelerator programs from around the world and incentivizing graduates from these programs to establish operations in New Jersey through the NJ Accelerate program will not only help our entrepreneurs succeed but will also bring hundreds of jobs and millions of dollars into the state,” added Sullivan.
The MSMIL was created in 2017 to drive positive economic outcomes for multicultural and women-led companies in the post-seed to Series B funding rounds by providing content, visibility, technical aid, and connectivity with stakeholders to help participating businesses grow faster.
Since it started three years ago, 32 tech or tech-enabled firms have participated, with many achieving successful acquisitions and additional funding rounds. The 2020 cohort startups include companies with strategies across various sectors, including health care and human-resources tech.
“Morgan Stanley is committed to bringing attention to the funding gap facing women and multicultural entrepreneurs and offering strategies for investors to close the gap, as evidenced in our recent research report,” stated Carla Harris, vice chairman and co-head of the Multicultural Client Strategy Group at Morgan Stanley. “It’s programs like NJ Accelerate and the MCIL that are critical in helping diverse entrepreneurs have equitable access to capital, and I look forward to partnering with the team at NJEDA to make strides on this mission.”
Interested individuals can go here to be notified once the next application period opens.