Clara Wu Tsai, co-owner of the Brooklyn Nets, launched the largest business accelerator for minority founders of early-stage startups on Monday.
Named BK-XL, the accelerator will invest up to $500,000 each in 12 startups led by Black, Indigenous and other minority founders in 2023.
“Capital is one of the biggest impediments to wealth-building, particularly for BIPOC entrepreneurs,” Wu Tsai told The Associated Press in an interview. “We thought that investing in this segment was how we could create wealth, not only for the entrepreneurs, but also through all the different jobs that they are going to create.”
Increasing investments of venture capital in startups run by minority founders became a priority for many during the racial reckoning that followed the police killing of George Floyd. According to Crunchbase, only 2.4% of all U.S. venture capital raised between 2015 to 2020 was allocated to startups with Black or Latinx founders. Funding to Black entrepreneurs quadrupled in the first half of 2021 to $1.8 billion. However, investments to minority founders this year have dropped steeply
BK-XL is part of Wu Tsai’s plan to change that. The accelerator is another piece of her racial justice work, with her husband Joe Tsai, to improve economic mobility for minorities. Because of their ownership of the Brooklyn Nets and the Barclays Center arena in Brooklyn, they have decided to focus their economic mobility donations and investments in the New York City borough as well to maximize their impact.
“It will be a mix of grants, loans and investments into this borough which I think ultimately is going to result in strengthening the community and the building up of people,” Wu Tsai said.
Last year, the Tsais’ Social Justice Fund launched the “EXCELerate” initiative that provided no-interest loans to Black-owned small businesses in Brooklyn that needed help recovering from the COVID-19 pandemic shutdowns. Wu Tsai said the investments through BK-XL will help new businesses that are ready to expand.
For startups chosen for the BK-XL program, the first $125,000 investment will be in return for 7% equity in the startups, split between Wu Tsai’s Social Justice Fund and the investment platform Visible Hands.
Daniel Acheampong, general partner at Visible Hands, said BK-XL will offer more than a monetary investment. Founders selected for the program will receive free office space and a 10-week immersion program on building successful businesses, with mentorship help from Visible Hands, Tsai’s investment firm Blue Pool Capital, and other partners.
“Being a founder is a lonely journey,” said Acheampong, adding that it’s even harder for minority founders because there are so few of them. “It helps when you’re doing it in the context of folks who can say, ‘Hey, I’ve been through your experience. I know the challenges of bias in raising capital.’”