A week before the 50th anniversary of the March on Washington, Rev. Jackson penned a reflection in the Chicago Sun Times, in which he described the contemporary struggle for equal economic opportunity as the fourth and final movement in Martin Luther King’s “unfinished symphony for freedom.” One glance at the hard economic data– the unemployment numbers, household wealth, and the growing disparity between rich and poor– proves Jackson’s point. The vision that Dr. King articulated during the march for jobs and freedom, has yet to be fulfilled.
And still, in brown enclaves across the country, minority entrepreneurs are spearheading novel ways to fill the persistent opportunity deficit. They are participants in a contemporary economic rights struggle that replaces traditional protest with innovation, and the formation of eco-systems that generate wealth and jobs in historically blighted communities.
Nowhere is this mindset more visible than in Harlem, where the interests of Wall Street, Silicon Valley and Malcolm X Boulevard seem to converge. There, a new class of diverse, tech-minded entrepreneurs from all over the world are building upon the neighborhood’s legacy of renaissance and resistance, transforming Harlem into a tech and innovation hub.
Somewhere near the center of Harlem’s startup community is a dynamic 22 year-old named John Henry, a first generation Dominican-American known for his infectious optimism and preternatural business savvy. The doorman-turned-entrepreneur built and sold his first startup, an on-demand home services business, in two years.
Then, a week after he sold his company for an undisclosed figure, he launched Cofound Harlem, a nine month community-based accelerator program, with the intent to create 100 new businesses in Harlem over the next five years. This spring, Cofound introduced its inaugural class. Among the four startups, 75 percent of the founders are minorities.
“We’re at the intersection of doing well and doing good”, says Henry, whose non-profit takes 0 percent equity in exchange for an agreement that the accelerated companies will remain in Harlem for at least four years. Those are unprecedented terms in the accelerator world, particularly considering that one of Cofound’s portfolio companies, Bandhub, was recently valued at $4 million dollars.
But Cofound’s structure and commitment to diversity is a prime example of the social-consciousness that permeates Harlem’s startup community. There’s a palpable awareness the presence of vibrant tech firms in Harlem could have broader effects for Harlem’s residents long term– job creation, youth empowerment, tech-education, and even lower crime.
And now, less than a year after launching his unique accelerator, Henry is upping the ante. He is launching a Harlem based venture capital fund, Cofound Ventures, that will invest in the startups that emerge from the Cofound accelerator program with a high potential for return.
“The fund is projected to be anywhere from five to ten million dollars, and we’re looking to have ready by the end of our next class,” Henry says.
In exchange for equity, the accelerated companies stand to walk away with as much as 100,000 dollars in funding.
“$100,000 is not necessarily the end-be-all,” he says, “but what it does is it kicks off the round and it signals to the market that this is a company that is worth investing in.”
That signal, in and of itself, could be worth more than the actual investment. Venture capital is defined as early-stage funding for startup companies who are high risk, but also high potential. Serious financial backing in its earliest stages can determine whether a company becomes the next Facebook, or flounders in a sea of competition.
Regrettably, the venture capitalist community is often most risk-averse when it comes to funding women and minority lead companies. Less than 1 percent of all venture backed start-up founders are Black in comparison to 87 percent that are White, according to CB Insights data from 2010. The systemic discrimination in the VC community not only serves as a potential stumbling block for minority entrepreneurs, it may have a more insidious effect on minority employment.
Young companies are the primary source of job creation in America, according to a 2010 study by the Kauffman foundation that tracked job growth from the 70s through the aughts. It showed that during that time period, young firms added an average of 3 million jobs per year in comparison to established corporations who were net destroyers during that time frame, eliminating on average 1 million net jobs per year.
The study disproves the common misconception that massive hiring initiatives by corporations are the antidote to unemployment, suggesting that that startup activity and innovation are the real economic drivers. It also makes painfully clear the averse impacts of an uneven playing field when it comes financing young companies. If minority founders are under-represented in the startup world, then the likelihood of newly created jobs going to minority workers is far less likely.
Though Cofound Venture’s slate of investors will be ethnically and geographically diverse, Henry says he is courting successful African-American entrepreneurs.
“They’re the most likely to buy into the vision,” he says, “because we’re trying to revitalize the neighborhood that’s historic to the black community.”
Cofound’s model, which delicately merges both a non-profit and for-profit venture, is the kind that economic activists have touted for years. It evens the playing field for minority entrepreneurs, and endows an opportunity to have stake in those companies. It is a model that can be replicated in the Harlem’s across the country.
“Harlem, because of how unique it is, how much civil rights history is here, it is truly kind of representative of minority cultures everywhere,” say Henry. “When you talk about Hispanics, we have Spanish Harlem with deep roots. And when you talk about Blacks– It’s just a place that I feel resonates with minorities everywhere.”
Cofound Ventures will officially launch in 2016. In the meantime, Cofound Harlem is actively recruiting its second class of startup companies. Portfolio companies selected for the nine month acceleration receive $50,000 in resources, world-class mentoring, and free office space for the duration of the program.
Entrepreneurs wishing to learn more about Cofound’s accelerator can visit cofound.co.
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