Morgan Stanley
  • Inclusive Ventures Lab
  • Nov 12, 2020

Making Their Pitch

Our fourth Multicultural Innovation Lab Demo Day connected startup founders with potential investors in an unexpected way.

While the fourth Multicultural Innovation Lab Demo Day—at which participants in our startup accelerator for diverse entrepreneurs pitch their companies to potential investors—took place virtually, the stakes remained very real.

As Vice Chairman Thomas Nides said in his opening remarks, companies that have taken part in the Lab to date have collectively raised over $48 million in additional funding as a result. That’s no surprise given the high bar for admission to the five-month program, which provides founders of companies in the seed- to Series-A-stage with the resources and access to help ramp the growth of their businesses, culminating in this day of pitch presentations.

Carla Harris, a Morgan Stanley Vice-Chair and Co-Head of the Lab, kicked things off, saying, “We had fierce competition this year, with over 500 companies competing. Nine rose above the rest. We are proud to say that two completed fundraising rounds during the Lab, both oversubscribed.”

Nevertheless, investors still had plenty of potential deals to consider, as founders of fourteen companies offering everything from data analytics and instant noodles to veterinary telehealth pitched for six minutes each to a virtual audience of investors. These included five companies sponsored by our partners, HearstLab and Newark Venture Partners Labs, who share Morgan Stanley’s vision of building a community of diverse entrepreneurs.

‘Social Justice Awakening’

“We founded the Lab in 2017 to address the trillion-dollar funding gap women and multicultural entrepreneurs experience and to be part of the solution to close it,” says Alice Vilma, Co-Head of the Lab. “We offer tech and tech-enabled companies founded by women and people of color with exactly the things that have traditionally been elusive: content in the form of a tailored curriculum; capital in the form of a cash contribution from Morgan Stanley; and connections in the form of access to our global network of experts and investors.”

This year, there were unexpected challenges—and opportunities—brought by the pandemic, as well as a new focus on racial justice and equity following the death of George Floyd. “The recent social justice awakening is changing investor behavior,” says Vilma. “We are now seeing investors make concrete commitments to engage with women and multicultural entrepreneurs. Especially with the acceleration of the social justice movement, we’re seeing a significant uptick in VC interest in African-American-led startups.”

Invaluable Guidance

One such startup is SoHookd, a rewards platform that enables companies to offer their customers and employees a range of wellness-themed experiences and products, from athletic apparel, to healthy food to self-care products. Their clients include health insurers and membership loyalty platforms that want to drive customer engagement with incentives that appeal to consumers who are looking for new ways to redeem their miles and bonus points, as well as employers who utilize SoHookd’s platform as a perk for their employees. It’s a $125 billion industry that is ripe for disruption, and Founder and CEO, B.J. Wiley Williams says that the Multicultural Innovation Lab gave her the tools to take advantage of that. "The Lab was a phenomenal experience that helped to hone our business model, sales strategy and investor pitch,” she says.

Erica Plybeah, founder of MedHaul, a web-based marketplace that enables health-care providers to book personalized non-emergency medical transportation for patients based on their special needs, is another founder who learned important lessons during her time at the Lab. That’s thanks in part to her Morgan Stanley mentor Sigal Zarmi, the firm’s International CIO and Head of Transformation: “Erica has a fantastic business model and is a great presenter, but she wanted to further improve how she was articulating her business plan. We worked on her communications strategy and how to effectively engage with her stakeholders—investors, business partners and talent. We also had discussions on leadership and how to build and empower her teams."

The Power of Morgan Stanley

Nicolas Guillen, Chief Financial Officer of BaseCap Analytics, which provides software that helps organizations efficiently improve their data quality, says the Lab helped his company pivot in a significant way. Launched by Guillen and his coworker at Morgan Stanley Steve Smith in the wake of the 2008 financial crisis, BaseCap started as a way for companies to manage regulatory reporting. “But we quickly realized our concept is applicable to any industry, from insurance to healthcare to retail.”

But turning what was essentially a successful consulting business into a software product proved more difficult. Then two things happened: The pair landed a big client, and they were accepted into the Lab. “That stamp of approval from Morgan Stanley paired with the first client that we got, one of the largest asset managers in the world, started creating traction with other investors,” says Guillen.

Once in the program, Guillen found game-changing advice. “How we were communicating was preventing us from raising funds. 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 execute on our plan.’ When we started doing that, everything changed.”

Now, says Guillen, “A lot of exciting things are happening, because we have a crucial North Star to follow.” What’s more, he says, “Having Morgan Stanley in our cap table, having all these investors, really gives us a lot of credibility and operational value. It makes all the difference.”

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