During Nets' controversy and before award ceremony, Tsais' Social Justice Fund announce new business accelerator for BIPOC founders, highlight Clara, not Joe

For Brooklyn Nets and arena company owners Joe and Clara Wu Tsai, philanthropy is part of public relations (and business), so let's look at yesterday's rollout of BX-XL, "the largest business accelerator for minority founders of early-stage startups."

The means up to $500,000 for 12 Brooklyn-based businesses led by BIPOC founders (which isn't necessarily the same as "minority founders) from the Joe and Clara Tsai Foundation's Social Justice Fund (SJF), announced in 2020 in the wake of protests following the police murder of George Floyd.

So that's potentially $6 million and thus, depending on timing, could fulfill (and more) the annual pledge of the ten-year, $50 million commitment. Any profits will be re-invested into Brooklyn businesses. 

So far, they've put $2.5 million into a loan fund, not necessarily fully dispersed, to BIPOC businesses, as well as smaller sums toward grants to Black leaders and an art curriculum for students based on the late Jean-Michel Basquiat, plus an unspecified sum into a neon art (or is it also advertising?) installation on the arena plaza.

“Capital is one of the biggest impediments to wealth-building, particularly for BIPOC entrepreneurs,” Wu Tsai told The Associated Press (AP). “We thought that investing in this segment was how we could create wealth, not only for the entrepreneurs, but also through all the different jobs that they are going to create.”

Note that the initial investment of $125,000 is in return for 7% of equity, which suggests an early valuation of nearly $1.8 million.

A focus on Clara Wu Tsai

Note that, while the exclusive story was headlined Brooklyn Nets owners start program for minority-led startups, the photo, provided by the public relations firm DKC News--which surely pitched the AP's Philanthropy Editor on behalf of the SJF--pictured only Clara Wu Tsai. The lead of the article mentioned only her.

So too did the press release, headlined CLARA WU TSAI, THE SOCIAL JUSTICE FUND, AND VISIBLE HANDS LAUNCH “BK-XL,” THE LARGEST ACCELERATOR FOCUSED ON BIPOC FOUNDERS.  The website "About" page, as noted below, mentions only her.

(By the way, do we know how large the smaller accelerators are? This one in Texas has $3 million in capital, smaller grants, with "20 entrepreneurs of color per quarter." This one in Washington has $5 million in capital, again smaller grants, with "eight cohorts of 25 businesses each.")

Why might the focus be on Clara Wu Tsai?

Well, she doesn't have a behemoth Chinese company like Alibaba to run, so she understandably may take the lead on philanthropic (and philanthropic-business) efforts.

Also, Joe Tsai has faced a significant amount of backlash for his management of star guard Kyrie Irving, now suspended (and considered "unfit" for the Nets) for failing to apologize sufficiently for posting and implicitly endorsing an anti-Semitic film. 

As The Nation's Dave Zirin put it yesterday, citing ESPN's report that Alibaba financially supported the “cultural genocide” of Uyghur Muslims, "For some reason Tsai is 'fit to associate' with the Brooklyn Nets."

So it's understandable to take the focus off Joe. The AP article had an obligatory query about the current controversy, which Wu Tsai lobbed back to "previous statements made by the team."

About the timing

Why now? Well, the new program has been in the works for a while. And it's possible that they wanted to announce it even earlier--applications open on December 5, and close January 20--but were sidetracked by the Kyrie crisis.

It's highly likely, though, that the Tsais wanted the announcement out before Wednesday, Nov. 9, when they are being honored--questionably--by the Municipal Art Society (MAS) with the Jacqueline Kennedy Onassis Medal. 

This gives the Tsais another halo, regarding a specific local (rather than national) philanthropic investment, and distracts from (or weighs against) any unfitness for the honor, such as their purchase of condos in the kind of "supertall" tower the MAS has crusaded against, or Joe Tsai's support for the Chinese regime.

From the AP

From the AP article:

For startups chosen for the BK-XL program, the first $125,000 investment will be in return for 7% equity in the startups, split between Wu Tsai’s Social Justice Fund and the investment platform Visible Hands.

Daniel Acheampong, general partner at Visible Hands, said BK-XL will offer more than a monetary investment. Founders selected for the program will receive free office space and a 10-week immersion program on building successful businesses, with mentorship help from Visible Hands, Tsai’s investment firm Blue Pool Capital, and other partners.

“Being a founder is a lonely journey,” said Acheampong, adding that it’s even harder for minority founders because there are so few of them. “It helps when you’re doing it in the context of folks who can say, ‘Hey, I’ve been through your experience. I know the challenges of bias in raising capital.’”

Note that Visible Hands has three general partners, not one, and they made available the one who's Black, Daniel Acheampong. not Yasmin Cruz Ferrine or Justin Kang.

“We want to show that investing in Black businesses makes money,” Wu Tsai told the AP. “We want to show it’s good business.” Again, there's an elision between BIPOC and Black, which may be even more important now that there's a significant Black backlash toward critics of Irving and even Joe Tsai.

As Zirin wrote, urging that Irving's no martyr, "The only way we can make these links"-- between fighting both anti-Semitism and broader fights against racism and oppression--"is to both condemn this video while also condemning the anti-Black racism of the response, not to mention the anti-Black racism that constantly goes ignored."

About Visible Hands

Visible Hands states:

Visible Hands is a venture capital firm with a 14-week, virtual-first accelerator on a mission to highlight and invest in the limitless potential of overlooked founders. At the earliest stages of company-building, we provide meaningful funding (up to $175k), personalized support, and social capital to help our founders build exceptional technology startups.

So essentially the SJF is piggybacking on that.

Who's eligible? From Visible Hands:

We are focused on investing in underrepresented founders at the earliest, most formative stages of company-building. This includes (but isn't limited to) women, trans and non-binary people, and Black, Latinx, and Indigenous American people.

So, not necessarily the same as the SJF focus.

The press release

Below is the press release, in full. By the way, the "additional investment of $375,000 via an uncapped SAFE" means a Simple Agreement for Future Equity without a valuation cap, which means that "whether the value of the company goes up or down, an investor always converts at a discount to the next round valuation."

CLARA WU TSAI, THE SOCIAL JUSTICE FUND, AND VISIBLE HANDS LAUNCH “BK-XL,” THE LARGEST ACCELERATOR FOCUSED ON BIPOC FOUNDERS

Brooklyn-based Accelerator to Invest up to $500,000 in Each Company Selected
Social Justice Fund to Partner with Visible Hands to Identify Prospective Startups

Brooklyn, NY – November 7, 2022 – Clara Wu Tsai, founder of the Social Justice Fund and owner of the Brooklyn Nets, New York Liberty, and Barclays Center, announced today the launch of BK-XL, a new Brooklyn-based early-stage startup accelerator for BIPOC founders. BK-XL is the largest accelerator for BIPOC founders by potential investment size per company.

Twelve startups founded by BIPOC leaders will be selected for BK-XL’s inaugural 2023 cohort and receive up to $500,000, which includes an initial investment of $125,000 (in return for seven percent equity) and an additional investment of $375,000 via an uncapped SAFE (upon meeting certain growth benchmarks and maintaining operations in Brooklyn for at least one year). In operating BK-XL, the Social Justice Fund is partnering with Visible Hands, a trusted investment platform and accelerator for early stage, overlooked founders.

In addition to receiving funding from BK-XL, selected founders will participate in a ten-week immersion program in Brooklyn during which they’ll receive office space along with ongoing mentorship and support from investors and operators at Blue Pool Capital, Visible Hands, BSE Global, the Brooklyn Nets, Barclays Center, and other partnering organizations. BK-XL and its network of partners will continue to support the selected companies after the completion of the accelerator program.

“Our intention is to identify the most innovative BIPOC founders and provide them with the funding and network support they need to build scalable and sustainable businesses,” said Clara Wu Tsai. “With BK-XL, we’re bringing the best and brightest BIPOC talent to Brooklyn and giving them the same level of investment and access to resources that others have enjoyed for decades.”

Only 2.4 percent of all U.S. venture capital raised from 2015 to 2020 was allocated to companies with Black or Latinx founders, according to Crunchbase. And, while funding for Black startups nearly tripled from 2020 to 2021, in the wake of George Floyd’s murder, that funding is already nearly back down to pre-2020 levels so far this year.

This issue is particularly acute in New York City: while the Black community makes up 22 percent of the city’s population, only 3.5 percent of NYC businesses are owned by Black entrepreneurs. Meanwhile, the BIPOC talent pool within the tech sector is stronger in New York City than in other major markets, with Black and Hispanic workers making up 21 percent of its tech sector, compared to less than 10 percent in the San Francisco Bay area and in Boston.

“Very few BIPOC founders are currently served by the major accelerator programs,” said Daniel Acheampong of Visible Hands. “We know these individuals are out there and that they bring uniquely valuable experiences and perspectives to the businesses they create. With Clara and the Social Justice Fund’s support, BK-XL will put fuel on the fire of Visible Hands’ efforts to identify and support BIPOC founders so they can transform their vision into businesses that will prosper and benefit the larger community, especially in Brooklyn.”

Applications for BK-XL will open on December 5, 2022, with a close date of January 20, 2023. Selected companies will be notified by early March of 2023 and the program is expected to begin in mid-April of 2023 and run until late June of 2023. More information on the timeline and application process is available at www.bk-xl.com.

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About the Social Justice Fund

The Joe and Clara Tsai Foundation launched the Social Justice Fund in 2020 in Brooklyn, New York, with a commitment to fight for racial justice and plan for the economic recovery of the Borough in the post-Covid era. Driven by a $50 million commitment over ten years, the Social Justice Fund has provided small-business loans to local BIPOC-owned businesses impacted by COVID and provides grants to community leaders working to combat racial injustice.

From BX-XL

Brooklyn-born. For BIPOC founders. Up to $500k per company.

BK-XL is an early-stage startup accelerator program focused on BIPOC founders and based in Brooklyn. The accelerator is a partnership between the Social Justice Fund and Visible Hands.

The ten-week accelerator will provide BIPOC founders with access to early-stage venture financing on best-in-class terms while providing office space and ongoing mentorship / support from investors and operators at Blue Pool Capital, Visible Hands, BSE Global, the Brooklyn Nets, Barclays Center, and other partnering organizations.

From the BX-XL FAQ

INVESTMENT

Up to $500,000, which includes an initial investment of $125,000 (in return for seven percent equity) and an additional investment of $375,000 via an uncapped SAFE (upon meeting certain growth benchmarks and maintaining operations in Brooklyn for at least one year).

SUPPORT

Participants will receive office space along with ongoing mentorship and support from investors and operators at Blue Pool Capital, Visible Hands, BSE Global, the Brooklyn Nets, Barclays Center, and other partnering organizations. BK-XL and its network of partners will continue to support the selected companies after the completion of the accelerator program.

ADDITIONAL DETAILS

Applications for BK-XL will open on December 5, 2022 with a close date of January 20, 2023. Selected companies will be notified by early March of 2023 and the program is expected to begin in mid-April of 2023 and run until late June of 2023.

ELIGIBILITY

Founders of early-stage startups whose racial identities are under-represented, e.g., Black, Indigenous or people of color ("BIPOC"). While we will accept founders from all sectors, we especially encourage applications from startups in sports/media, ecommerce, and fintech/crypto. Founders must commit to building their startup full-time in Brooklyn for the entirety of the program.

From ABOUT BK-XL

SOCIAL JUSTICE FUND

The Joe and Clara Tsai Foundation launched the Social Justice Fund in 2020 in Brooklyn, New York, with a commitment to fight for racial justice and plan for the economic recovery of the Borough in the post-Covid era. Driven by a $50 million commitment over ten years, the Social Justice Fund has provided small-business loans to local BIPOC owned businesses impacted by COVID and provides grants to community leaders working to combat racial injustice.

CLARA WU TSAI

Clara Wu Tsai is a businesswoman, investor, and philanthropist. She is the Vice Chairman of BSE Global, owner of the Brooklyn Nets, Barclays Center, and New York Liberty, and a Founder of the Joe and Clara Tsai Foundation. In 2020, the Foundation established a $50mm Social Justice Fund focused on driving economic empowerment and closing racial gaps in Brooklyn. Among other projects, the Social Justice Fund has provided small-business loans to BIPOC founders impacted by COVID, worked in partnership with NYC’s Department of Education to bring educational programs about Jean-Michel Basquiat and blockchain to NYC students, and provided grants to community leaders working to combat racial injustice. Clara is also a founding partner of the REFORM Alliance, which seeks to reform state-level probation and parole policies. In 2021, she was recognized as a “Champion of Justice” by the John Jay College of Criminal Justice for her work on social and racial justice.

VISIBLE HANDS

Visible Hands is the most trusted platform for early-stage, overlooked founders looking to launch and scale high-growth startups. Visible Hands provides programming, financial investments, social capital, mentorship, and more holistic support to historically marginalized founders in the hopes of closing the racial and gender equity gaps in the VC and entrepreneurship ecosystems. Every year, Visible supports and invests in hundreds of companies through its flagship accelerator and partnerships with leading corporations such as Amazon, Google, and Meta.