Addressing the Venture Capital Gap for Minority Entrepreneurs
With statistics showing that less than 2% of venture capital is flowing to Black and brown entrepreneurs, south Los Angeles-based nonprofit Plug In Ventures aims to solve this problem by being more deliberate and intentional, “really providing founders coming from unlikely places with a built-in network to really help them accelerate their businesses,” according to Plug In Ventures founder and Chief Executive Derek Smith. The company’s accelerator, which supports budding companies founded by Black and other minority entrepreneurs from underserved communities, saw its demand double in less than a year, receiving applications from 138 different startups hoping for one of the eight spots in this year’s 12-week accelerator program.
While Smith grew up in L.A., he launched his career on the East Coast, working in advertising on New York’s Madison Avenue and later spending time on business development in the digital space before launching his own endeavors.
“As an entrepreneur starting a business, I always felt like there was some underestimation in my background or in my profile, which didn’t really fit this cookie-cutter mold I think most venture capital or investors look for,” Smith recalled. “So, I know what it feels like to be underestimated or to feel like you don’t fit the bill in terms of what someone needs to look like, what their pedigree needs to look like to build and operate a business.”
Smith returned to his California roots during a time when Santa Monica, Playa Vista, Pasadena, and Venice were establishing themselves as miniature tech hubs, inspiring the founder to assist the innovation being developed by South L.A. startups. Smith explained, “I really wanted to rewrite the narrative of what South L.A. means, how people think about it and really how people who live in South L.A. think about South L.A. in terms of opportunity.”
Empowering South L.A. Startups Through Intentional Support
Launched in January 2015, Plug In Ventures’ accelerator program features a twice-weekly schedule of rigorous workshops and classes led by other successful entrepreneurs, investors, and subject matter experts. Funding this program primarily comes in the form of grants and sponsorships, some from major companies like Nike and Verizon, as well as the law firm Gunderson Dettmer and the California Healthcare Innovation Fund. Smith is expecting revenue generated from this year’s grants and sponsorships to increase roughly by 30% or 40% over 2023’s total, and the CEO hopes to soon offer two accelerator programs per year.
This year’s increase in accelerator startup applications proves the program has real value. Plug In Ventures had to ultimately narrow down 138 applicants to 8 founders, who would form the Plug In’s fifth class of founders. This year’s collection of founders has launched technology startups in the healthcare, fintech, gaming, and climate industries.
There are many Westside and downtown-based accelerators, but what makes Plug In Ventures stand out from the crowd is its dedication to focusing on Black and other minority innovators and its South L.A. location. Having accelerated nearly 50 startups already through its five founder cohorts, Smith expresses the importance of Plug In Ventures’ mission, stating, “Investing in entrepreneurs in these unlikely places is really a huge opportunity we’re overlooking in the U.S., and we need to double down on this.”
