The city of Memphis is growing into a hotspot for Black entrepreneurs and tech talent with the assistance of innovative organization, Epicenter. This nonprofit is helping Memphis create and sustain an entrepreneurial ecosystem by investing and providing resources for Black tech startups. The current goal is to raise $100 million to fuel the future of the city, which is attracting Black tech talent in various industries across the world.
Through its numerous programs, Black innovators are thriving and excelling from the plethora of opportunities the city has to offer.
Epicenter’s capital executive-in-residence, Anthony Young and program manager of ZeroTo510, Danielle Gore spoke with AfroTech about why Memphis is the ideal place for Black tech talent and how the city is actively expanding support and investments to founders.
This interview has been condensed, rearranged and edited for clarity.
AfroTech: How is the Memphis entrepreneur ecosystem actively expanding Black tech talent?
Young: I think our entrepreneurial ecosystem is working to expand our Black tech talent, but we haven’t done enough just yet. However, there are a number of organizations and initiatives across the Memphis ecosystem that are potentially feeding into the tech entrepreneurial ecosystem. For example, ZeroTo510, has expanded its recruitment efforts to also include local and national HBCU students and alumni to reach more Black STEM talent for the accelerator and the Memphis entrepreneurial and tech ecosystem. They are also piloting a 5-week long virtual pre-accelerator program for ideation and early-stage tech founders, which I believe could help increase accessibility for general tech, med-tech and health-tech founders.
We have organizations like CodeCrew, Tech901, BLIT and LITE Memphis who are on the ground, in Black communities and schools providing tech and entrepreneurial training to adults and youth – building the pipeline for Black tech talent and Black tech innovators. I believe Epicenter’s role in expanding the Black tech entrepreneurial ecosystem is leveraging our entrepreneurial resources with local tech training orgs and our industry-specific expertise, such as, ZeroTo510, AgLaunch, Life Science TN, etc. I think this, paired with our local universities’, corportates’ and city leaders’ renewed focus on STEM initiatives and tech-related resources present a lot of promise for Black tech talent expansion.
Gore: I manage ZeroTo510, a Memphis-based accelerator program that trains early-stage medical device start-ups on the steps required for getting 510(k) clearance from the FDA. We leverage the fact that Memphis is the second largest orthopedic medical device hub in the country to bring in experts – from regulatory affairs and reimbursement to manufacturing and product development – and help guide our entrepreneurs.
When we consider growing Black tech talent in Memphis, we must consider the barriers to entry that exist globally in the technology field. I see this so often with the highly regulated and specialized field of medical device and health technology. Most of our tech founders have a bachelor’s degree in a STEM-related field like engineering, and several have masters or doctorates as well as experience in the medical and STEM field. Considering that Black folks are highly under-represented in STEM, already, we have to realize this presents a limit on “who” gets to be innovators in the tech field.
Additionally, what has been great about Memphis’ approach is Epicenter/ZeroTo510 and many other organizations are not merely waiting for Black tech talent to materialize or come to us. We are all being intentional and proactive about seeking out Black tech talent, training Black talent and making as many resources available as we can. It is our goal to expand Black tech talent in Memphis by leveraging Epicenter’s entrepreneurial resources with local tech training resources and ZeroTo510’s industry-specific expertise. I think this, paired with our local universities’ and city leaders’ renewed focus on STEM initiatives and tech-related “up-skilling” resources present a lot of promise for the future.
AfroTech: What are your thoughts on how venture capital investments are distributed among Black tech startups in Memphis?
Young: Memphis is investable. Memphis outperforms our national peers in capital investments, specifically as we dig into the percentage of Black-led companies gaining access to capital and the fund’s percentage of dollars invested into Black tech startups. I think that speaks to the current state of venture capital across the country, as well as to Memphis’ commitment to building an inclusive tech economy. Nationally, Black-founded companies are accessing less than 1 percent of venture capital, and it’s even more challenging for Black women to raise capital. Locally, 16 percent of early stage companies accessing VC have a Black founder, and 13 percent of invested startup capital has gone to companies with a Black founder. Moreover, we’re at an average of about 25 percent of each accelerator cohort having a Black founder since Epicenter was founded in 2015. This is largely due to the entrepreneurial ecosystem making intentional efforts to invest in, support and grow Black startups in Memphis. As we continue to build the investment pipeline, and continue to see impact from programs like the ZeroTo510 Medical Device Accelerator, Code Crew, BLIT, Tech 901 and many others, I think Memphis will become a hub for Black tech startups. More work needs to be done, and we still have progress to make, but Memphis is investable right now.
Gore: I should preface this by saying my perspective is limited to my scope of work as the program manager for ZeroTo510.
I think that Epicenter has done an excellent job investing in Black entrepreneurs across sectors – including tech. Epicenter and our investment partners have done above the national average in terms of the investments they have made in tech start-ups that have a Black, minority and/or woman founder. However, we recognize that being above the national average (1-2 percent) for investment in Black start-ups is still not good enough. Our tech portfolio is ~16 percent Black (companies who have at least one Black founder), which we consider low since it does not reflect the Black populous of our city (~64 percent). Therefore, Epicenter has made it an explicit objective to expand our Black tech portfolio and invest in more Black tech founders. We always want to ensure that the entrepreneurs we serve and fund are reflective of our city’s demographic.
AfroTech: What is the process of deciding how to distribute funds to budding entrepreneurs?
Young: Locally, Memphis has a complementary capital stack that provides access to capital types for entrepreneurs across industries and life stages. And as we learn more about gaps and barriers, we’re continually adding and making adjustments to the varieties of capital available for our companies. Within the past two years, Memphis entrepreneurs have been introduced to new loan funds from our CDFIs, including a mezzanine fund to provide patient capital for minority-owned firms. There is new access to non-dilutive capital, various economic development incentives and other forms of creative capital. We’ve also rolled out new venture funds, such as Epicenter’s Formation Fund. As we gather more capital tools for our entrepreneurs to start or scale, it’s important that the fund will be equitably distributed. Equitable deployment doesn’t start when we’re reviewing the Executive Summary or when a loan application gets to an underwriter’s desk. In fact, it doesn’t even begin with deal sourcing and pipeline management. Equitable deployment begins with the policies and procedures of funding firms. What methods are we using to evaluate companies? What practices are we using to assess growth potential? Moreover, are there any racial and/or gender biases in our systems? How do we dentify bias, and ultimately remove that barrier? Those are the questions that I like to ask, and the conversations that I like to have with our partners in the ecosystem. As we’re sourcing deals and evaluating a company’s team, market, and technology, it’s important to view each deal through an equitable lens to ensure that diverse companies are getting access to funding.
Gore: This varies from founder to founder. I can speak to the process for our summer accelerator. Specifically, for the accelerator program, we recruit teams and have them submit a formal application where they describe the medical problem they are solving, their medical device/solution to the problem and why they are the team to implement this solution. From there, we select our top choices and have screening calls. If we find the team and innovation promising, we conduct 1-3 additional interviews with the founders and do our own due diligence. In this part of the process, we try to get a better understanding of the technology, its market potential, and the dynamic of the founders. (Are they coachable? Are they a good fit for our program and the Memphis ecosystem?” etc.) After interviews and additional research, we further refine our list of applicants. When we have our top choices, we present them to our accelerator partners and the rest of our team. After establishing that they are a good fit, we invite them to participate in the accelerator, and bring in a legal firm to do formal due diligence and set them up for venture capital investment. The teams sign the participation and SAFE agreements for the accelerator program and capital is deployed shortly after.
AfroTech: What advice would you give an upcoming tech entrepreneur?
Young: Find a mentor and build relationships. Having access to a personal “lifeline” is invaluable as the company starts to grow or if the company begins to experience tough times. As companies begin to seek capital, it’s important to consider what’s being given up. How much ownership is being given up? How much control is being given up? Lastly, I advise entrepreneurs to think through personal finances, particularly Black entrepreneurs. Approximately 75 percent of Black-owned companies are funded by the owner’s personal cash, which could exhaust savings and retirement accounts. So, I advise entrepreneurs to build a financial model that pays the entrepreneur, helping to secure some sense of financial stability, even if the company fails.
Gore: I would advise them to do an inventory on their strengths and weaknesses – both for themselves as a founder and their technology. The tech field is vast, and the medical device startup space is so multifaceted with technical and regulatory requirements. It is a steep learning curve. So, it requires you to accept what you do not know, learn as much as you can as quickly as you can, and recruit for your weaknesses. With that in mind, I would also advise tech founders to build a strong network of supportive mentors around them. It can be these advisers and mentors whose expertise and experience help you to grow your company and who can connect you to opportunities – whether it be a program, talent, or a capital resource.
AfroTech: Why do you think it’s important to build a community of Black tech talent in Memphis?
Young: Building a community of Black tech talent helps to attract top companies and other top talent. As an ecosystem, we must ensure that founders and companies have access to resources such as capital, talent, programmatic support, and other resources such as places to live and spaces to create.
A scaling tech community also assists with retaining talent and companies. It’s important for Memphis and peer cities to foster an inclusive, thriving ecosystem of continual support and resources for companies such as Sweet Bio and MedHaul, as well as create landing spots for emerging talent from Code Crew, Tech 901 and others.
Gore: As a predominantly Black city, we have to be intentional in cultivating, developing and investing in a community of Black tech talent. Otherwise, we stall the overall growth of our city, and more importantly, risk leaving behind the Black populous when it comes to tech skills training and job readiness. No one in our community is expendable. So, if we want to envision the maximum potential of our city’s future, we cannot do that without considering how we build an inclusive Black tech community here. It adds to Memphis’ rich history and culture. Plus, Black Memphians deserve to see themselves represented in the growing local and national tech sphere.
Furthermore, when we bring in Black tech talent and build community, we are also ushering in a diverse range of perspectives, culture, backgrounds, and skills sets that can catalyze innovative change and discovery throughout Memphis.
AfroTech: How will these initiatives and investments impact the country overall?
Young: A vibrant Black tech community can move the needle in the racial wealth gap. As we continue to build our pipeline of Black tech founders, we’re also actively working to mobilize a network for Black angel investors. An increase in growing and scaling companies should lead to an increase in high paying jobs, as well as wealth generation for both the founders and the investors. Beyond that, genuine conversations about inclusion, equitable deployment and wealth gaps, should also include the diversity of the leadership of funders. African Americans represent only 2 percent of senior positions at venture capital firms. If we are serious about a just, inclusive economy and bridging the wealth gap, we should hire more Black talent at VCs, actively invite Black investors to participate, and we should fund more Black-led companies. So I think a healthy Black tech community is economically significant for Memphis and other cities around the country. I am confident that Memphis is indeed investable, and I’m optimistic about our steps to build an inclusive tech community.
Gore: Memphis is a city of contrasts. On one hand, we have three fortune 500 companies, world-class medical and educational institutions, and one of the nation’s highest concentrations of nonprofits and service organizations. On the other hand, we also have the highest poverty rate in Tennessee. So, when I think about Memphis and Black tech, I view us as a petri dish of opportunity for the nation.
The Memphis tech demographic will likely not mimic that of a Silicon Valley or Cambridge or New York. And, for me, that is where the real opportunity exists for Black tech talent expansion in Memphis. We get to refine effective frameworks for growing traditional tech college grads. And because of our unique demographic, we also get to explore new profiles and backgrounds for “the Black tech innovator”. Inner-city Black adults and Black youth who started their career in tech because of access to programs like CodeCrew, Tech901, or LITE Memphis. For medical devices, it is breaking the mold of the MBA or engineer leading a high-growth, high-tech medical device startup. And envisioning programming that allows us to plug a medical device finisher, who received training at a local community college, into our ecosystem, and seeing similar outcomes of success. When we achieve that, not only does our city benefit, but our country does.
Because when we succeed in building an equitable, inclusive Black tech community here, it lays the groundwork for how we replicate that success across the country for other cities with comparable demographics and economies.
Memphis is creating its own space in the tech world and the city needs talent like you to accomplish this goal. To learn more about programs and Black tech talent who has benefited from the Memphis entrepreneurial ecosystem, visit here.
This piece has been brought to you in partnership with Epicenter.