Techstars Advancing Cities Fund - where do we stand after deploying 50% of the fund?

Excited to announce that we have now officially deployed over 50% of the Techstars Advancing Cities Fund that we raised with the help of J.P. Morgan Private Bank .?

As a result, we have backed 262 startups - 64% with black and brown CEOs and 32% with gender-diverse CEOs. With acceptance rates between 0.5% and 5.3% depending on the accelerator program, this was a highly selective process.?

While this fund can strategically invest in all founders, we remain bullish in our thesis that the largest financial upside often lies not in following the pack, but in going where most other investors do not –?and in many cases that is traditionally underrepresented entrepreneurs.?

This should be non-controversial. Yet when we started our roadshow talking to JPM clients about raising a fund with a particular focus on Black and Brown CEOs, we were met with the same question multiple times: “It is so much harder to raise money when you’re a founder of color –?do you think this fund is going to perform?” Our answer to that question was always an unequivocal “Yes!”, because our programs are set up to provide the right support to ensure? those systemic fundraising challenges can be overcome.

The reality faced by underrepresented founders remains stark. In 2022, Black and Latino founders received only 1% and 1.5% respectively of total US VC funding . Women-founded teams received 1.9% of VC funds, and only 0.1% of VC funds went to Black and Latino women founders. While 2023 is not yet over, recent data is even worse. For example, in the first half of 2023 Black founders received only 0.75% of all venture capital raised in the US.

Despite pledges of progress from many VC firms in recent years, the needle has scarcely moved. And it’s why, over the past 18 months, since the Advancing Cities fund began deployment, we have organized more than 75 investor events for the portfolio, and facilitated nearly 4,000 individual investor introductions. To create the connections, network and traction that our founders need to grow their companies and raise capital.

Collectively, these startups have already collectively raised $26M with 14 of them raising more than $1M (congrats to Poly Platform , Wellthi , Aerialoop , Trez (Techstars ‘23) , Socian Technologies (A Techstars Detroit Powered by JP Morgan '22 Portfolio Company) , RightHear , KredFeed , Allison (Fintech) , TaxxWiz , University Startups , Anesthesiology Matchmaking Engine|Lokum App , CarpeDM , St. Martin, and SQOR.ai ). Of the companies we backed in our first programs that finished Techstars 12 months ago (it takes time to raise a seed round and unfortunately it typically takes even more time for founders of color), 27% with at least one Black or Latino founder have raised.?

The VCs who have been particularly active in investing in these companies include: Active Capital , Chicago Early Growth Ventures , Fearless Fund , NOEMIS Ventures , The Venture Reality Fund / The VR Fund , Kamay Ventures ,? Northwestern Mutual , and TEDCO .

Techstars Advancing Cities fund founders are making strong progress at a time when the headwinds are intense. Despite a prolonged downturn and entrenched industry biases, we are experiencing time and again that with the right network and connections, founders of color can raise with the same velocity non-diverse founders.

So what does all of that mean for our fund and its investors?

We invest at such an early stage, with an 8-10 year timeline, that the fund’s success will not be determined by how long it takes to raise a pre-seed or seed round. It’s about setting up the fund, and its portfolio companies, for long term success. And we’re seeing that come to fruition. The Advancing Cities Fund portfolio companies are leveraging Techstars to set them on a more positive trajectory and consequently that will generate and enhance this fund’s long term returns.

To give you insight into the kinds of companies I’m talking about, here are a few that I’m particularly excited about in this fund:

• Aerialoop builds drone delivery networks over cities to revolutionize the urban logistics infrastructure, enabling faster, more efficient, and sustainable transportation of goods.?
• boxxtech is automating the sale of alcohol with priority ID technology, facial recognition technology and advertising on the machine.
• Diagon is a first-of-its-kind equipment sourcing platform bringing hardware, services, and financing into a consolidated user experience. Diagon indexes manufacturing equipment products, suppliers, and service providers to up-level and modernize the equipment sourcing experience.
• Elite Sweets are the makers of The Elite Donut, a protein packed, low sugar donut that is keto-friendly, gluten-free, soy-free and absolutely delicious.
• Inphlu, Inc. provides organizations with tools and knowledge to build world-class employee advocacy.
• ProsumerGrid builds software for optimal planning, forecasting, and impact assessment of distributed energy resources
• Saavor Inc is a vertically integrated full stack SaaS platform that provides transactions and payments solutions for university dining operations.
• STIGMA is creating safe spaces to practice talking about mental health and was named Google's Best App for Good in 2022.?
• University Startups is committed to creating opportunities for students and lifelong learners to expand their worlds beyond a traditional curriculum. The organization empowers students by fostering an entrepreneurial mindset, which helps students to think creatively and find ways to translate their passions into real-world experiences.
• Wellthi is embedded social finance software designed to help institutions increase the lifetime value of customers by turning every customer into a community of customers.

A big thank you to the J.P. Morgan team who believes in this fund and helped us raise and deploy it: Tiffany Johnson Lewis , Daniel Weisman , Kristin Kallergis Rowland , Leyonna Barba , Lou Celli , Shaunté Robinson , Danny Resnick , Michelle St. Louis , Brian Williams , Jeff Fry , Ziyaada Abdulfatai , Molly Koehler , Kaylin Andrew Tabb , Phil Tassi , DeMarcus Williams , Marc-Lloyd Ramniceanu , Macielle Osterling , Brannon Albritton , Prad Parthiban , Karen Rios , Manasa Gummalla , Dimitris Kouvaros , Juan Gutierrez , Nykole Prevost , Mussa Seid , Joseph Clark III , Becci Kinsella and David Correa .

Onward and upward!