Derek Smith, its founder Connect South LA, grew up in South Los Angeles and saw firsthand the frustration that stems from a lack of economic development. That’s why he decided to come home in 2015, after spending the first part of his career in New York, to start a startup incubator in his old neighborhood.
He wanted to help aspiring entrepreneurs learn the ropes of growing a startup, and hoped that in the process, building those businesses could help bring higher-paying jobs to the area.
Smith already knew that founders from historically underrepresented groups face a greater challenge when it comes to getting funding. Funding for Black founders fell for the third year in a row to an all-time low in 2023 — and it was pretty small to begin with. Black founders last year accounted for just 0.48% of total venture capital, just $661 million of the $136 billion allocated, per Crunchbase data.
This is a substantial institutional barrier. And that’s why Smith’s ultimate goal for Plug In South LA is to smooth the way for black and brown entrepreneurs who want to build tech startups and need help and guidance. This could help them become not only successful businesses, but people who help build wealth and create jobs in areas often left behind by startup ecosystems.
“We really want to support those founders and entrepreneurs who can build businesses that can scale at scale,” Smith told TechCrunch.
As with many startup incubators, people who come through Plug In participate in a 12-week program that includes about five hours a week outside of their day jobs to manage their companies. Programming includes weekly workshops along with more industry expert panels and advice from people in the tech community who work with each panel on topics like pitch deck critique, the importance of storytelling, financial planning, and more. The program concludes with a demo day for investors.
Smith sees a ton of underutilized talent in areas like South LA. He hopes that by helping to incubate these companies as they scale and become successful, they will share his larger vision of responding by creating jobs and supporting talent in underserved or overlooked communities. For him, the philosophy behind his company is based on economic growth and building a network of entrepreneurs, rather than relying on outside forces to help.
“Politicians don’t want to do the work. The [big tech] companies don’t want to do the work. Entrepreneurs should do it. And that’s why we need to find entrepreneurs who align with that larger vision,” he said.
Vaughn Blake, partner at Blue Bear Ventures, says he met Smith soon after Plug In South LA launched and was asked to be on a panel during one of the first demo days. “Once I realized what Derek was up to and recognizing the need for this kind of organization and mentorship here in Los Angeles, I was happy to get involved,” Blake told TechCrunch.
Smith took some time to create the organization. For the first several years, before Plug In South LA’s first official cohort in 2020, it ran monthly and quarterly programs focused on helping diverse founders who were in the early stages of building a startup. Those programs eventually evolved into the most formal acceleration program in existence today, according to Smith. It is currently in the process of recruiting the fifth cohort of the incubator, which will take place later this year with 12-15 participants, depending on how many companies it selects.
One of the most successful companies to come out of the incubator so far is ChargerHelp, a platform that aims to help field technicians troubleshoot and repair broken EV charging stations. The founders went through Smith’s 2020 accelerator program shortly after the company launched.
ChargerHelp co-founder and CEO Kameale Terry says the experience was invaluable, giving her concrete help with things like improving her speech. He credits his time in the incubator at least in part with landing the $17.5 million Series A. To date, the company has raised over $20 million, per Crunchbase data.
As part of the larger goal of creating jobs in the community, ChargerHelp is succeeding at that, too, from about a dozen employees when the company entered the program to close to 45 today.
Terry says one of the strengths of the program is that there is a network of people of color, all facing the same challenges, that continues to grow and help participants long after they leave the program. “This program is interesting because I can find people who have a similar lived experience, where I can get help and offer help. And it’s a really cool thing to be a part of,” he said.
In addition to ChargerHelp, some other companies that have emerged from the program include; SwayBrands, a platform designed to help connect diverse creators with companies and brands. The startup has raised nearly $2 million, according to Smith. Another one is ThriveLink, which created a product that uses artificial intelligence to help underserved patients find and apply to the social services they need. Smith says the company has started pilots with several major health insurers.
Until recently, Smith did not invest directly in companies coming out of the program due to a lack of capital, but that is changing with future cohorts as the company moves from a free-lance model to an equity-based one.
“We’re looking at a piece of capital solution with a neighboring fund that we’re opening that will invest in our cohorts going forward, and we’ll take a 5% equity stake in the companies with a follow-on equity investment on top of that,” Smith said.
