Entrepreneur Brian Brackeen explains why his and four other multicultural and women-run startups need to move in to Morgan Stanley's offices for three months.
When Brian Brackeen turned eight, his father gave him a computer — and explicit orders to skip the video games and start coding. The paternal foresight paid off. Brackeen, now the founder of Kairos, a startup that brings artificial intelligence to facial recognition, is looking to disrupt the security and marketing worlds with his new technology.
But first, he has to navigate the investment world in search of capital to make his vision a reality. “I come from a middle-class African American family in Philly,” says Brackeen. “I’m not that guy from an affluent family who went to an Ivy League school and has a huge college network of friends in banking and hedge funds.”
That’s why Kairos — Greek for “opportunity”— and four other startups (Landit, AptDeco, GitLinks and Trigger) run by women or multicultural founders, are moving into the ninth floor of Morgan Stanley’s Time Square headquarters in New York for three months. They are the first cohort of the firm’s “Innovation Lab,” a tech-talent accelerator program and brain-child of Carla Harris, a Vice Chairwoman of Morgan Stanley and Head of its Multicultural Client Strategy Group.
“Only a small fraction of all venture capital money is given to multicultural and women entrepreneurs,” explains Harris. “Meanwhile, Morgan Stanley is a leader at the intersection of what these companies need: capital, connections, and investment banking content. We have the resources, access to relationships, and the expertise that can help refine these businesses and hopefully attract capital to scale up in size.”
Harris first came up with the idea after sponsoring a number of pitch sessions with minority tech entrepreneurs held by PowerMoves. She took her inspiration to Morgan Stanley Vice Chairman Tom Nides, who gave his wholehearted support to create a startup accelerator.
Harris then put into motion the kind of networking capabilities that founders of all five startups are about to experience themselves. After working the phones, she put together an investment committee, which gathered technologists with expertise in business development; investment bankers who cover the Technology, Financials and Media sectors; private wealth managers; private-equity fund managers from Investment Management and equity capital markets experts. Mentors will be drawn from relevant banking divisions and those bankers will use their internal and external contacts to help the startups reach their next stage of growth. Morgan Stanley is also providing capital to each one.
“As a mentor, my job is to work with our start-ups and provide the support and advice we typically reserve for our own portfolio companies,” says Pete Chung, Head of Morgan Stanley Expansion Capital, a private equity fund with Investment Management which invests in later-stage growth companies. “We’ll battle-test their business strategy; look for alignment and logic in their execution plan and then ask them to provide the analytics and metrics to track progress. We’ll also harness Morgan Stanley's collective wisdom and vast web of industry connections to activate growth for our Innovation Lab participants.”
Morgan Stanley’s Technology division will be key to the success of the Innovation Lab. For the startups, being embedded in a global financial services firm and being in close contact with its technologists will not only allow them to tap their expertise at any time, but immerse them into the real world problems that many of their potential customers are trying to solve.
Having the support, expertise, and networks of Morgan Stanley is a game changer,” says Lisa Skeete Tatum, founder and CEO of Landit, a technology platform that enables companies to increases the success of women in the workplace. “Their partnership has the potential to accelerate our curve and expand our opportunities.
Meanwhile, for the firm’s technologists, “hosting these emerging tech companies is inspiring and rewarding,” says Michael Poser, Morgan Stanley’s CIO of enterprise infrastructure and technology risk and Co-Chair of Technology’s Diversity Committee. “We’ve partnered with numerous start-ups, helping them commercialize their offerings. It’s something that’s core to our innovation strategy."
Harris sees the multicultural and women-run startup space as an untapped opportunity. “There’s a world of innovators out there with exciting ideas that could become the next multi-billion dollar tech firm, and what they lack is exposure and access to capital and a chance to prove themselves,” says Harris. “Of course, we see this as an opening to identify, nurture and be there to provide the relationships that can mean the difference between obscurity and an IPO.”
After all that, however, it’s the technology under development that matters. Brackeen for one believes that his technology can have large-scale applications. For example, it could scan the minute changes in facial emotions of hundreds of people screen-testing a new movie, and then parse audience reactions by age, gender, ethnicity and attention span—all valuable insights for film executives and marketers trying to figure out what works, what doesn’t, and how to bring it to market.
In mid-November, the startups will get a chance to make their own sales pitches as a Morgan Stanley symposium with potential investors.
“If they look back and are able to say ‘wow, these last three months here were invaluable and I’m now ready to go onto the next stage of venture capital financing,’ then it’ll be a success,” says Alice Vilma, an Executive Director in the Multicultural Client Strategy Group, who designed the program. Ultimately, Harris and Vilma plan to extend the program to host 10-15 startups a year in two cohorts.