Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9pm ET. This is excerpted from my recent interview with Rodrick Miller, @PowerMovesNOLA. Rodrick Miller is President and CEO of New Orleans Business Alliance, the official economic development organization for the City of New Orleans. His organization is focused on implementing prosperitynola, which helped to create PowerMoves.NOLA which is specifically funding minority lead tech start-ups. Entrepreneurs, investors or potential program partners interested in PMN can learn more information by visiting their website, www.powermovesnola.org
SmallBizLady: What is PowerMoves.NOLA and what are you all seeking to do?
Rodrick Miller: PowerMoves.NOLA is a new national initiative focused on creating power through opportunity – the opportunity of high-growth, minority entrepreneurship. Its focus is to provide access to capital, connections and guidance to increase the number of venture-backed minority entrepreneurs. Historically, there has been a significant focus on growing lifestyle and other minority businesses. However, there has only been limited attention given to strengthening and increasing high-growth minority companies.
SmallBizLady: What are high-growth minority companies?
Rodrick Miller: These are not construction companies, restaurants, service firms, or lifestyle businesses, but rather these are companies which have innovative business models with the potential to reach national/international markets. These companies tend to need significant capital to scale, take on outside investors as equity partners and often have some proprietary technology or approach. PMN will work throughout the year to support these startups with our key events culminating during Essence.
SmallBizLady: Why is minority entrepreneurship important?
Rodrick Miller: Minority entrepreneurs represent a largely untapped resource in the United States economy. Although the number of minority-owned businesses has grown significantly over the past twenty years, only 1% of venture capital funded startups in 2010 had a black founder.
Think about what is being left on the cutting room floor in terms of wealth creation, innovation in society, and American economic competitiveness. Minority entrepreneurship is not only something that will better the condition for minorities in this country, but can substantially strengthen our nation’s economic position and address systemic issues of income inequality. By strengthening minority entrepreneurship, we can grow new jobs in our economy, increase our productivity, and hopefully garner some quality of life improvements through innovative ventures and technologies.
SmallBizLady: You are giving away money to entrepreneurs as part of the Chevron Power Moves Pitch on Saturday, July 6th at the ESSENCE Music Festival. Tell me about this contest.
Rodrick Miller:This pitch is part of ESSENCE’s EMPOWER U track at the convention center that is focused on career, wealth and entrepreneurship. Four women will be pitching. Chevron will be awarding $25,000 to the winner selected by the judges and $5,000 to the audience favorite. You are one of our four judges, and Sherri Shepherd will be emceeing. If your followers have never been to a pitch event, we urge them to come check it out at the convention center- noon on Saturday, July 5th.
SmallBizLady: What is a pitch event?
Rodrick Miller:A pitch is basically selling people on why they should invest in your business. In a pitch event, the entrepreneurs compete to win, and the winner usually gets a money prize. At PMN, we will have 4 pitch competitions, and each winner will receive a $25,000 prize. At the Chevron PowerMoves Pitch, the audience will also select a favorite, who will receive $5000. These startups participate in these pitch competitions because If they win, the money won helps finance the business. They also get good exposure and meet potential investors and customers
SmallBizLady: How do potential investors evaluate a company?
Rodrick Miller:Investors look for 4 main things:
- Is the business idea solving a problem?
- How large is the opportunity?
o How big can the company become? How many people or businesses would be willing to buy their product or service
- What is the competition like?
o Who is the competition, how is this idea better, and how easy or hard will it be for this startup to sell their product or service?
- How good are the entrepreneur and the team?
o They can have a good idea, that is solving a real problem and has the potential to be big, but if the team can’t execute, then the company won’t succeed.
SmallBizLady: What are the stages a startup goes through?
Rodrick Miller:We generally group startups into four stages:
1. Begin with an idea – the ideation process: incubators and accelerators help that entrepreneur develop the idea. At PowerMovesNOLA we will be hosting a Risingstars Boot Camp, an intense two-day program offered by Techstars, one of the top incubators in the country, to help fifteen early-stage tech entrepreneurs of color further develop their business models.
2. Once you have the idea, you need money to build the prototype or design the app. This first money is often the hardest to raise, because you are selling an idea. There is nothing to show the potential investor. This early money is often called the Friends and Family round of investment. The folks willing to invest in you are usually your friends and family – people who know and believe in you. But, if you don’t have rich family and friends, it’s hard to raise this first round of money, which is usually $250,000 or less. PowerMoves.NOLA will be investing $150,000 in companies raising money to build out their idea.
3. Once you have the prototype, startups usually then raise another round of money so they can get customer validation – demonstrate their product or service is something that people or businesses will want and pay for. This round raises money from people who don’t know you, usually called Angel Investors, and companies generally are trying to raise between $500,000 – $1 million. Half of the companies pitching at PowerMOves.NOLA are in this phase.
4. After this prototype round, successful companies are then ready to raise a much larger round – at least $3 – $5 million, so they can then grow their company quickly to a much larger scale. PMN has 10 companies looking to raise this larger round.
SmallBizLady: What was the process for entrepreneurs that were selected for this year’s events?
Rodrick Miller: From September 2013 through April 2014, we recruited and vetted over 300 companies. We networked across the country with incubators, accelerators and others in the startup space. Our team visited NYC, Chicago, California and Atlanta combined with telephone and Skype interviews, we personally connected with over 125 of these startups.
Companies were invited to submit more detailed information and apply to be considered for the three pitch sessions and the Risingstars Boot Camp. We ultimately selected 20 companies for the three pitches and 20 folks for the boot camp.
And after this launch weekend, we will begin looking for participants for next year.
SmallBizLady: What’s the plan for PowerMoves.NOLA after the launch at Essence Fest?
Rodrick Miller: After the weekend, the PowerMoves.NOLA initiative will build a “rolodex” of high impact individuals and subject matter experts willing to commit mentor hours to help an entrepreneur of color. And we’ll take every opportunity to highlight the power of African-American and Latino entrepreneurship. As we work to increase the number of minority-founded, ventured backed companies nationally, we will also leverage the innovation and entrepreneurship that has been a catalyst for positive change in New Orleans post-Katrina to make our city a national “proof point,” creating a robust entrepreneurial ecosystem that supports minority startups.
SmallBizLady: Why in New Orleans?
Rodrick Miller:New Orleans is a place where innovation and entrepreneurship have been a catalyst for positive change in the years since Hurricane Katrina. In recent years, the New Orleans region has become a hotbed of entrepreneurial activity, outpacing the rest of the country in startups per capita. Additionally, KPMG named New Orleans one of the most economical cities to do business, Forbes has named New Orleans the #1 Brain Magnet in the Country and the #3 Best City for Tech Jobs, and Inc. Magazine called New Orleans the Coolest Startup City in America. Our growth is supported by several entrepreneurial hubs and by aggressive state tax incentive programs. We built an entrepreneurship ecosystem from the ground up, but no place in America has figured out how to tap into the opportunity of minority startups. We think New Orleans can be a proof point for the rest of the nation.
And what better place and time to launch this effort than during the ESSENCE festival?
SmallBizLady: How can individuals and companies get involved in PowerMoves.NOLA?
Rodrick Miller:PowerMoves.NOLA will begin are entrepreneur and fellowship recruitment for year two beginning in September 2014. Entrepreneurs, investors or potential program partners interested in PMN can learn more information by visiting our website, www.powermovesnola.org, following us on social media @PowerMovesNOLA or contacting us at info@powermovesnola.org.
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