Morgan Stanley’s Innovation Lab, an accelerator for multicultural and women-led startups, pairs entrepreneurs with seasoned, in-house pros to break down barriers to success.
Chris Gay admits to not knowing very much about Morgan Stanley Inclusive Ventures Lab when he applied. “I thought it would be just like any other accelerator program,” he says. “There would be some money, and I know Morgan Stanley has a great brand, but beyond that, I didn’t really know what to expect.”
As it turns out, Gay, the founder of Care Advisors, which provides Medicaid and other social-service enrollment software for hospitals and insurance companies, has been pleasantly surprised. As part of the intensive six-month program, he has been paired with mentor Steve Rodgers, Managing Director and Head of Healthcare Investing in the Investment Management division of the firm, who brought his vast experience in both private equity and the healthcare industry to bear on the challenges that Gay faces.
“With his background in private equity, Steve has helped me work through strategies whereby we could leverage capital sources besides traditional venture capital investment,” says Gay. “He’s really helped me see how I might grow a big company as a diverse entrepreneur when we aren’t necessarily going to be able to raise a ton of cash.”
Indeed, ask most entrepreneurs about the value of mentorship to their startups and they’ll talk about its “criticality.” Because you can’t know what you don’t know, the knowledge, experience and foresight of those who’ve been there before can make all the difference.
And Morgan Stanley has more than its share of a broad and deep bench of invaluable mentors who have seen a thing or two when it comes to disrupting markets, building a business, securing the right kind of capital and thinking strategically about growth.
Gay arrived at Morgan Stanley’s Times Square headquarters with a unique business model and plenty of enterprise customers, but faced a particular hurdle luring investors. “The core economics are really good. But our customers are low-income households,” he explains. “That’s a space that traditional investors are typically not all that excited about.” Another challenge: the long sales cycle associated with the service he provides.
Rodgers, for his part, has been happy to share his insights. “Chris has found a business opportunity that has profit potential but also meets the need of an underserved population,” says Rodgers. “It’s wonderful to have an opportunity to help someone like that become successful.”
Besides advising Gay on other sources of capital, 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.”
Says Rodgers, “It’s always better to talk to someone who makes the decisions and can tell you, ‘This is how things get done.’ ”
It’s the kind of access to capital and expertise that many diverse founders lack. According to a survey conducted by Morgan Stanley, investors report capitalizing multicultural and women-owned businesses at 80% less than businesses overall.
“It’s not because there isn’t a wealth of visionary women and multicultural entrepreneurs out there,” says Alice Vilma, Managing Director and Co-Head of the Morgan Stanley Multicultural Innovation Lab. “At the Lab, we see just how strong the talent is. Rather, it’s a question of access to funding. These founders simply may not have the same resources as others to secure seed funding and other types of capital.”
For Jotham Ty, the founder of Gappify and another member of the 2019 Innovation Lab cohort, the snag with finding investors lay in figuring out the right messaging for his product, a cloud-based platform that automates tasks for corporate accounting. “We’re able to explain it to an end customer very easily,” says Ty. “But for people outside of accounting—which includes investors and potential partners—it’s been a problem.”
His Morgan Stanley mentor, Carol Greene-Vincent, Managing Director and Head of Internal Audit, not only helped him refine that messaging, but encouraged him to think of applications beyond his current service offerings—all while making sure he avoids rookie mistakes. “Having spent 25 years looking at the inner guts of companies, I am fairly sensitized to what can go wrong and how expensive it is for mature companies to fix things,” Greene-Vincent says.
A presentation to members of Morgan Stanley’s finance department, who are intimately familiar with the problems Gappify is solving, went well. “They were favorably impressed,” says Greene-Vincent. Meanwhile, Ty has come away with something, too: “I feel like I can articulate my vision of the company much better now because of the Lab.” And he’s been motivated to think big. “If you had asked me before I joined the Lab whether I had the confidence to sell to a Fortune 500 company, I would have said, ‘Let’s start with the midmarket businesses first.’ But now that I know the Lab has my back, I feel like we shouldn’t limit ourselves.”
Gay has seen the same wide-open possibilities. “It’s all about strategic resources,” says Gay. “Working with the Lab potentially saved us years’ worth of time and helped us close one of the biggest gaps that diverse entrepreneurs face, which is access to capital. For our company, it’s been life-changing.”