Morgan Stanley Teams With Invest Detroit To Help Minority Entrepreneurs Get Venture Capital

A large group of venture capitalists, accelerators, and incubators from all around the country are converging on the Motor City for Tech Week Detroit, April 13-15. Taking place alongside Tech Week is PowerMoves@Detroit, featuring pitch competitions, networking events, boot camps, and an “Art of the Exit” panel discussion with Carol’s Daughter Founder Lisa Price.

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PowerMoves@Detroit is presented by PowerMoves.NOLA in partnership with Invest Detroit and sponsored by investment banker Morgan Stanley. The goal is help alleviate the gap in the current growth rate and life span of minority founded start-ups compared to the national average is widening.  Less than 1% of all private equity in America in invested in black-owned companies. This disparity is due in large part to the disproportionate rate and which minority start-ups receive funding as well as other resources which are “keys” to success in a very competitive landscape.

“We need to connect with minority entrepreneurs or those who have an entrepreneurial spirit to educate them on the ease in accessing as well as the benefits in obtaining venture capital for their ideas,” says PowerMoves NOLA president Earl Robinson.  The growth in opportunity for minority founded companies has seen a surge in 2014/2015 with the new focus (targeted at minorities) of seed accelerators such as Y Combinator and most notably the growth of a national initiative such as PowerMoves.NOLA.

PowerMoves.NOLA was launched last summer, kicking off in New Orleans, Louisiana (NOLA) to address the generational obstacles that prevent minority entrepreneurship and increasing the number of venture-backed minority-founded companies by connecting minority entrepreneurs to a national network of capital, advisors and resources.  Through its fellowship program and other events, PowerMoves.NOLA acts as a catalyst for early-stage and high-growth minority entrepreneurs.

According to Robinson, over the last 11months, PowerMoves NOLA has committed to companies about $400,000 through its pitch competitions. “However, the companies under our umbrella have gone on to raise more than $13 million in investment commitments to about 17 companies. We are hands-on lending our brand and our network.”

He adds that at a given time, there are about five companies in residence on PowerMoves NOLA’s campus in New Orleans, about 20 companies that have participated in pitch competitions, and roughly 40 companies that are in boot camps run in the two cities.

New Orleans will continue to serve as the annual hub for PowerMoves.NOLA but the organization also will focus on a different key city and demographic each year. Robinson says, “This year we chose Detroit because there are a lot of parallels between Detroit and New Orleans, (which includes high minority populations) making it easier to follow the same blue print. New Orleans rebooted about 10 years ago because of an engineering failure; the failure of the levies post Hurricane Katrina. Detroit rebooted because of financial failure. When a city reboots it looks to new sectors and a new industries to power its 2.0 or next generation of development,” explains Robinson.

Invest Detroit is a $200 million private equity fund that has stepped up to answer the call for inclusive innovation by support high tech and high growth minority firms. Morgan Stanley is supporting the PowerMoves.NOLA’s startup initiative, because “we are in the business of bringing companies to market and providing opportunities for our investors as well as for leading companies,” says Morgan Stanley Managing Director Carla Harris, who notes that she was blown away by the caliber of the entrepreneurs who participated in PowerMoves NOLA’s pitch competition last year.

“These are entrepreneurs who don’t generally get access to mainstream capital either on the front end of the back end,” adds Harris who also was appointed by President Obama to chair the National Women’s Business Council. “I immediately saw the opportunity to take this nationwide and I saw the synergies between Morgan Stanley in terms of originating, distributing, trading and managing capital for institutions, governments and individuals.”

Access to traditional venture capital has been the biggest barrier for women and people of color, says Harris. PowerMoves NOLA events present and a win-win situation she says because it raises the visibility of high grown minority entrepreneurs and presents an opportunity for wealth creation.

“If you think about the venture capital space and the capital markets they are not inherently biased. It’s just that they are sometimes risk adverse which means that they look to patterns and historical success. When you think about the people who have run those companies that have been historically successful and generated a significant amount of wealth on behalf of investors these businesses have been piloted by people who don’t necessarily look like ”

“There is no gender or ethnicity that has dominion over brilliant ideas and brilliance in great startups,” says Robinson. “We are seeing to it that there is great deal flow in communities of color and we are seeking to mine those communities for great deal flow to possibly generate above market returns for investors.

Our goal is to turn the model on its head and look for and nurture entrepreneurs that wouldn’t hit the radar screen of a big venture capital firm, accelerators or a branded incubator.”

There are four key factors that PowerMoves Nola evaluates when it comes to entrepreneurs that are considered investable and scalable. Says Robinson, “we want companies to”:

  1. Know their competition incredibly well;
  2. Know what makes your special and be able to articulate that info;
  3. Know what is the strength of your C-Suite or management team and board of director or board of advisors;
  4. Understand extensively what is their revenue model–how they make money and acquire customers.

“The two most important questions to ask when you are trying to raise capital,” add Harris, are: “Why you and why now–why are you coming to market and why should someone invest in your business now.”

Other cities in site for PowerMoves NOLA and Morgan Stanley include Newark, Oakland, Houston and Dallas and other metro areas where there is a high concentration of people of color and a high concentration of talent that can be tapped into.