Programs like the Morgan Stanley Multicultural Innovation Lab help entrepreneurs grow and scale their businesses through mentorship, an intensive curriculum and access to networks and funding. Here are a few tips from current and former Lab participants on how to leverage them for success.
The statistics are sobering: Up to 90% of all startups fail, 20% within the first year1. And for women and multicultural entrepreneurs, who have less access to funding than other business owners do, the odds are even slimmer.
Studies have shown participating in an accelerator, like Morgan Stanley’s Multicultural Innovation Lab, a five-month immersive program for multicultural and women-led startups, can help fend off that kind of failure. According to the Harvard Business Review, “the value of accelerators seems real and likely comes from the intensive learning environment itself.”2 And it’s just as likely that what you get out of such a program depends on what you put in.
How can startup founders lucky enough to take part in an accelerator maximize the few months spent there? We asked some current and former participants in the Lab, which since 2017 has provided forty three multicultural and women-led companies the tools, resources, and connections they need to thrive, to weigh in. What follows is their advice on how to be pro-active in reaping the rewards of an accelerator program.
Just six minutes—about the time it takes to soft-boil an egg—can make a world of difference for a startup. But the know-how you need to hone a pitch doesn’t come naturally to some founders. An accelerator like the Lab can be crucial to developing this critical skill, particularly for entrepreneurs who don’t have much experience in front of VCs. “Beyond offering a structured curriculum, we work closely with founders to refine their narrative so that it really resonates with investors,” says Alice Vilma, Co-Head of the Multicultural Innovation Lab.
Claire Sulmers, the founder of the Fashion Bomb Daily shop, was one of them. She launched the multicultural fashion e-commerce site in 2006 after graduating from Harvard University in 2003. Its related online forum, the Fashion Bomb Daily, now has 2.4 million monthly visitors, and Sulmers also contributes to major fashion magazines.
Still, being a fashion influencer doesn’t necessarily mean you can influence potential investors. When Sulmers had to put together a business presentation to compete with some 700 other applicants to the Lab, she realized she didn’t know where to start. She relied on friends to help her craft the financial and other information in a succinct way that showcased her business and was lucky enough to land a spot in the current cohort. “I had been in the dark for a really long time,” she says, but since then she has been better at seeking out targeted feedback from experts. "You don't need to have a business degree to launch a successful startup, but you do need to have people who can show you the ropes and help you with your pitch. The secret is to always be learning from those around you."
Nicolas Guillen, co-founder and Chief Financial Officer of BaseCap Analytics, which provides software that helps organizations efficiently improve their data, and a member of the Summer 2020 Lab cohort, also focused on improving his pitch while there. “How we were communicating to potential investors was preventing us from raising funds,” he says. “We were asking, ‘Hey, what does your fund require for us to meet your criteria?’ The Lab team told us to switch the framing to say, ‘Hey, we have an opportunity for you. And this is our traction. And this is how we are planning to follow through on our plan.’ When we started doing that, everything changed.”
Guillen and his partner, Steve Smith, arrived at the Lab unsure of how to transform what had been to that point a successful consulting business, born out of the 2008 economic crisis, into a software sales operation. Rather than keep hoping that success would breed traction, they leaned on the Lab's resources and asked for help. They landed a big asset management firm as a client, and with the Lab's advice, they created buzz with other potential partners. Guillen’s takeaway? "Don't be afraid to be vulnerable and share tough issues with your mentors," he says. "What we got in return really came through on Demo Day [the Lab's culminating pitch event for investors], allowing us to change our message to focus on our execution."
Lab participants like Guillen and Sulmers follow a curated curriculum, including classes in sales, finance, marketing and branding. Every week, the startup founders meet in multiple sessions—this year virtually—with innovators in their fields. The Lab introduces these founders to industry expert, Morgan Stanley bankers and technology leaders, as well as potential clients and other investors.
The idea is for a team of advisors, led by Carla Harris, Vice Chairman of Morgan Stanley’s Global Wealth Management group and a senior client advisor, and Managing Director Alice Vilma, to help founders battle-test their business strategies and identify and help resolve gaps in their execution plans. “Our Lab uniquely presents high-growth startups led by multicultural and women entrepreneurs the opportunity to achieve tangible success,” says Carla Harris. “Everyone who participates has a vision we believe can truly disrupt the market. We simply give them the tools they need to achieve that success.” The Lab tracks progress, and even coaches them on everything from body language to value props. Since it started, 43 companies, representing $326 million in value, have participated in the Lab, and these companies have attracted another $58.8 million of capital from investors since then.
Chris Gay, the founder of CareAdvisors, which provides Medicaid and other social-service enrollment software for hospitals and insurance companies, was a member of the 2019 cohort. While at the Lab, he was paired with mentor Steve Rodgers, Managing Director and Head of Healthcare Investing in Morgan StanIey’s Investment Management division. Rodgers connected him with a hospital CEO who was able to quickly evaluate his product roadmap and eliminate options that he knew wouldn’t find traction. For Gay, the opportunity was invaluable. “Getting feedback from a CEO who has led multiple hospitals is something I couldn’t buy if I wanted to,” he says. “It’s always better to talk to someone who makes the decisions and can tell you, ‘This is how things get done.’”
Dennis Cail is a member of this year’s Winter Cohort and the founder of the online relationship-based lending platform Zirtue. He has also found that tapping into the vast network the Lab offers is allowing him to take the next big step with his business. Zirtue makes it easier for family members to lend each other money by handling the paperwork and payments, allowing people in under-banked communities to have access to better financing options than high-expense payday or other short-term lenders. The idea was good but needed fine-tuning. “It was the continuous resource pipeline and access to seasoned advisors that really helped us solidify our go-to-market strategy and product market fit, particularly with regards to our key performance indicators,” Cail says. And he’s not planning to stop using the lessons he’s learned once the program ends. Says Cail, “The expectation is that you will continue to perform and outperform from where you ended.”
1 National Business Capital and Services. "2019 Small Business Failure Rate: Startup Statistics by Industry.”