Bank Of America Launches Program For Underrepresented Entrepreneurs

Bank of America, a multinational investment bank that offers an array of financial services, announced that it would institute its impact accelerator program titled Bank of America Breakthrough Lab, a six-month program that will provide curated mentorships, increased digital competency, networking with industry experts and access to investors with working capital for selected "Black, Hispanic-Latino, Native American and other entrepreneurs from underrepresented communities [to] scale-up their technology-related businesses," read the company's press release.

"The bank's long-standing commitment to supporting economic opportunity for people and communities we serve is at the core of Bank of America Breakthrough Lab," said Rina Arline, Breakthrough Lab Program Director in Global Transaction Services at Bank of America. "We're excited to play a role in giving emerging entrepreneurs from a range of backgrounds access to the bank's vast resources and industry networks."

Tram Nguyen, Global Head of Strategic & Sustainable Investments at Bank of America, adds, "Our investment in minority and women-led funds has a catalytic effect in supporting diverse communities. Each time we support a minority-led fund, they in turn support diverse entrepreneurs, which ultimately helps us to achieve our goal of advancing economic opportunity. Each cohort of Breakthrough Lab founders plays a critical role in helping us to drive progress."

Bank of America Breakthrough Labs is an impact accelerator to empower and enable entrepreneurs from underrepresented and FinTech communities. The ultimate goal is to guide them to scale, launch viable businesses, and escalate job creation. In addition,

"We're looking at pre-seed stage startups that are focused in FinTech or tech enabled ideas that are promoting equity, specifically in that stage, we're looking at MVP development (minimum viable product) to early revenue stage. We offer live facilitated sessions and address items from user design, to best practices in startup businesses," said Arline. "We also do a lot of work around access to capital, we bring in our investor partners and other providers of capital to talk to our startups. Then we also bring in founders [who] make those discussions very relevant. Every startup is aligned to two senior-level mentors. So their mid-level executive mentors were very prescriptive, and how we align them, and how they work with our startups. At the end of the six months, each startup gets an opportunity to vie for equity investments, we have a pitch day, and they get an opportunity to pitch in front of investors and providers of capital."

Derrick Walton, Program Sponsor and Head of Emerging Payments in Global Transaction Services, Bank of America, oversees emerging payments innovation for our global transaction services. Walton scours the FinTech landscape and reviews which technology he can incorporate with Bank of America's clients, "Which was a pretty good impetus of how the breakthrough lab got started," he highlights.

In 2021, Bank of America established a pilot program with five startups selected from the New York market; in the subsequent year, the 2022 cohort admitted 17 companies from the U.S., Mexico, the United Kingdom, and France.

"We measure our success by following the startups for 24 months post-program. What we're specifically looking for is the following: one, how are they scaling? Secondly, did they access [the necessary capital], whether that was debt or equity? Then finally, as they are scaling, are they ultimately creating and adding jobs? If so, how many, how much, and where are they?" Arline describes during the video conference.

The inception of the accelerator program that focused on under-represented entrepreneurs sprung from the social unrest during the George Floyd protests. According to Walton, Bank of America had committed abundant finances, approximately a billion dollars, towards the advancement and reinvestment into minorities.

"I had come from a FinTech before I came to the bank, and I was thinking about what areas in which Bank of America could use that money and how we could bring it back to the community. Sometimes people forget how valuable the people that work at the banks are, and there are so many smart people here; if we can get them to utilize their experience and give it to communities out there to help them grow their business, [it would] be such a huge value-added," he states. Corporations often throw money towards a problem without engaging their time or resources. However, Bank of America seeks an active role in changing the trajectory of under-served locales. This comes on the heels of the criticism from Black-owned small business owners who saw the pledges many companies made during the 2020 protests but did not follow through.

“When we brought this through, and were looking for volunteers, we had so many volunteers from every part of the bank, whether it be technology, operations, or sales, everyone wanted to contribute in their own way. If someone knew something about the subject that a startup was doing, they jumped in; we were never short of volunteers or people willing to put their time in [to help]. So that was the value, [we have] decades of experience, and people wanted to help out because I think it impacts many people," said Walton.

Another piece of Bank of America's commitment to facilitating the growth of underrepresented businesses is to address the immense chasm between minority founders and their White counterparts when trying to access venture capital. In general, Black entrepreneurs obtain "less than 2% of all VC dollars each year," according to CNBC, based on data from Crunchbase. Arline says her corporation recognizes this disparity and has invested in minority-led funds that fund minority startups.

Bank of America has dedicated $421 million to over 130 minority and women-led funds. Those funds will go towards an estimated 2,000-plus minority- and women-led companies over five years.

Although the anticipation of the initiative will probably be well-received for advancing economic opportunity for under-resourced business owners that include people of color and women, Bank of America is a for-profit business entity, and cynics may question how the company will benefit from its altruistic endeavors.

"One of our focuses around responsible growth is helping our communities. So if we can help an entrepreneur be successful and scale, then not only does it help that entire ecosystem, but it also helps with the ultimate goal, job [and] wealth creation. So that's the overarching goal," Arline communicates.

Walton quickly interjects, "We know that [for] a bank, revenue is important, like any other for-profit business. But here's the difference, I think what came through to us is we are giving back to the community, and there is value for many employees who feel like they are making an impact in the world. But also, there's this other part; we're starting to be exposed to many ideas and innovations that the bank wasn't always privy to before. They [weren't always] reaching [certain targeted] communities. So as much as we are helping, we're learning at the same time. I think that can't be overlooked; there's a huge unbanked community out there. There are groups of people who still live paycheck to paycheck, and a lot of times, banks aren't always designed for those individuals. Now you see us bringing those forward and people making an impact, and we're able to help out in some cases by partnering with them."

The six-month accelerator program will be geared toward pre-seed stage companies with ideas related to FinTech or inclusive tech-enabled ideas related to HealthTech, WealthTech, EdTech, and housing, to name a few. Business owners will be exposed to financial inclusion, technology development, and a high-touch experience curriculum. Bank of America does not take any equity in the startups; participants will be introduced to how to work with large enterprises, guidance through the vendor process, and branding package, including logo and website design. The program received 140 applicants last year, and only 13 were selected.

Most mentors for the initiative will come from the FinTech industry, but Arline points out the bank will also have various sectors represented across the board.

"We are very prescriptive in terms of each startup. What we look at is the industry that startups in, as well as what are the milestones they're trying to solve. So, for example, one of the startups that comes to mind, the two mentors, one was a mentor from our tech team because this particular startup was trying to solve some data challenges they were having. So we looped in our global tech team, and then we had our GTS partners in Syntax, that were also part of the mentor duo. It comes down to what specifically they're looking for. We've brought in people from user design experience, but it's all across the bank," she says.

The Zone is one company selected for the pilot group and functions within the Health and Ed Tech space as a mental wellness platform for student-athletes. Upon graduation from the program, the owner signed up with a Big East Conference and had a target list of higher ed institutions they wanted to convert into actual clients, which they have successfully done due to their ability to access the required capital.

For business owners who are not accepted into the program, many can utilize the bank's resources and network. Bank of America's network of community partners who provide capital or serve as depository institutions, vendors, and investors can be accessed through the Access to Capital Directory for Entrepreneurs - Access to Capital Directory to help connect Black and Hispanic Latino entrepreneurs to resources and potential funding sources.

Arline foresees the program will continue for years to come, "We run one cohort, one program per year. So we run September through March each year, and we expect this to be an ongoing program." Bank of America also intends to expand the program internationally to Europe, the Middle East, Africa, Latin America, and Asia Pacific, with a pilot in India.

Founders of early-stage startups from underrepresented communities are encouraged to apply to the program that promotes financial inclusion and financial technology development, intending to increase the number and growth of small businesses. The deadline for applications is June 8, 2023 for a September 2023 start date.