Derek Smith, founder of Plug In South LA, grew up in South Los Angeles and saw firsthand the frustration that comes from a lack of economic development. That's why, after spending the first half of his career in New York, he decided to return to his hometown in 2015 and start his startup incubator in his old neighborhood.
He wants to help aspiring entrepreneurs learn the tricks of growing a startup, and in the process learn that building these businesses can bring good-paying jobs to the region. I was expecting it.
Smith already knew that founders of historically underrepresented groups faced greater challenges when it came to raising capital. Funding for Black founders has declined for the third year in a row, hitting a historic low in 2023, but the funding was pretty meager to begin with. Black founders accounted for just 0.48% of total venture funding last year, or just $661 million of the $136 billion allocated, according to data from Crunchbase.
That's a big institutional hurdle. That's why Smith's ultimate goal with his Plug In South L.A. is to smooth the path for Black and Brown entrepreneurs who are building tech startups and need support and guidance. is. In doing so, they may not only succeed in business, but also become wealth builders and job creators in areas that are often left out of the startup ecosystem.
“We really want to support founders and entrepreneurs who can build businesses that can scale broadly,” Smith told TechCrunch.
Like many startup incubators, people who join through Plug In participate in a 12-week program. The program involves approximately five hours per week in addition to your day job of running your company. The program includes weekly workshops, as well as advice from more industry-specific groups and those in the technology community who work with each group on pitch deck critiques, the importance of storytelling, financial planning, and more. It is. The program concludes with a demo day for investors.
Smith believes there is a lot of underutilized talent in areas like South L.A. He is committed to helping develop these companies as they scale and become successful, creating jobs and supporting talent in underserved and overlooked communities. He hopes businesses can share his broader vision of making a contribution. For him, the philosophy behind his company comes down to economic development and building entrepreneurial networks rather than relying on outside forces.
“Politicians don't want to do their jobs.'' [big tech] Companies don't want to do that work. Entrepreneurs have to do that. That's why we have to find entrepreneurs who align with this broader vision,” he said.
Vaughn Blake, a partner at Blue Bear Ventures, said he met Smith shortly after launching Plug In South LA and was asked to participate in a panel discussion at one of the early demo days. “Once I understood what Derek was trying to do and recognized the need for that kind of organization and leadership here in Los Angeles, I was happy to join,” Blake told TechCrunch.
Smith took some time to get his organization off the ground. For the first few years prior to the first official Plug In South LA cohort in 2020, he ran monthly and quarterly programs focused on supporting diverse founders in the early stages of building their startups. did. Those programs eventually evolved into the more formal accelerator programs that exist today, Smith said. He is currently recruiting for the fifth batch of incubators, which he plans to hold later this year with 12 to 15 participants, depending on the number of companies selected.
One of the most successful companies to emerge from the incubator so far is ChargerHelp, a platform aimed at helping field technicians troubleshoot and repair broken EV charging stations. The founders enrolled in Smith's accelerator program shortly after launching the company in 2020.
ChargerHelp co-founder and CEO Kameer Terry said the experience was invaluable and helped him in tangible ways, like refining his pitch. She credits her $17.5 million Series A, at least in part, to her time in the incubator. The company has raised more than $20 million to date, according to Crunchbase data.
As part of its broader goal of creating jobs in the community, ChargerHelp has also succeeded in that goal, growing from about 12 employees when it joined the program to nearly 45 today.
Terry said one of the benefits of the program is that there is a network of people of color, all facing the same challenges, that continues to grow and support participants even after they leave the program. I say that it means being there. “This program is interesting because you can find other people who have similar life experiences and you can ask for help and offer help. It's really great to be a part of that.” she said.
In addition to ChargerHelp, other companies emerging from the program include SwayBrands, a platform aimed at connecting diverse creators with agencies and brands. The startup has raised about $2 million, Smith said. Another is ThriveLink, where he has developed a product that uses AI to help underserved patients find and apply for the social services they need. Smith said the company has started pilots with several major health insurance companies.
Until recently, Smith had not invested directly in companies that participated through the program due to a lack of funding, but that is changing with prospective investors as the company moves from a pro bono model to an equity-based model. .
“We are looking at capital solutions with neighboring funds that will invest in our group in the future, and we intend to take a 5% stake in that company and make additional investments on top of that,” said Smith. said.