AUGUST 1, 2019
Episode 33 – Accelerating Equity in the Startup Community
Preston James from DivInc
In this episode, we talk to Co-Founder and CEO of DivInc, Preston James, about his journey from 20-year Dell veteran to angel investor to startup accelerator CEO. Preston talks about the “ah ha” moment when he decided to start DivInc, the reason he chose Austin to launch a diversity-focused accelerator, and the lessons he’s learned along the way.
Read the Transcript
Savannah Barker (00:00):
Hello. Welcome back to another episode of Change the Rules. I’m your host, Savannah Barker. And I’m the Director of Strategic Programs here at Notley. With me in the studio today is our very exciting guest Preston James, CEO and Co-founder of Divinc, an Austin based accelerator program for women and people of color. Preston, thank you for joining us.
Preston James (00:18):
Hey, how are you? Good to be here.
Savannah Barker (00:21):
So before we get into Divinc, I would love for you to start by telling me a little bit about your background.
Preston James (00:26):
Sure. So I’m going to try to give you the short, long version of that. So I am a 20-year Dell veteran. I was there from 1993 to 2014, spending most of my career in IT, technology consulting, and sales, which gave me a wide breadth of experience in a variety of industries and gave me perspective on the various different business problems that you know, organizations were having. And so throughout my career there, you know, had global leadership opportunities. My last role there from 2013 to 2014, I had an opportunity to become the Managing Director for the Global Center for Entrepreneurship. And that was an initiative that was really trying to, you know, push more into the entrepreneurial space and the tech startup community. And I had an opportunity to do work with the entrepreneur and resident there. And through that experience, it sort of re-energized my desire to, or gave me this, “Oh, Preston you’re a small business guy. You’re not like a big corporate guy.” And so it reenergized me from that perspective. And then through my experiences there it just really made me say, “Hmm I need to be in this space in some kind of way.” Why? Because I wanted to be able to leverage technology to help small businesses grow and scale. That was ultimately like, how do we solve these problems to help them grow and scale.
Dell provided a early retirement opportunity – I took it and said, “Okay, I’m going to go into this startup scene in some way, shape or form. Left without a job lined up or anything. I ended up being invited to become a mentor at Capital Factory, which is considered the startup hub of, of Austin, if you will, a coworking space, accelerated program. And then a good friend of mine encouraged me to become an angel investor. I mean, she really like pushed. And I was like, “Well, why are you pushing me to be coming to angel investor?” She says, “Well look, I’ve been an entrepreneur for like 20 years or so. And I can’t recall knowing a African American angel investor.” So I was like, okay, whatever. So I’m going to go home and research. And like, I’m going to check her out and see what she’s talking about. And the reason why that was important, because even what I, when I was in that last year, in that role, we saw there was a lack of diversity in the tech startup community. We didn’t see women, you know, a lot of women pitching, raising money, things like that. And so so she was big on diversity in that space. And when I checked, I did the research and I found 10 publicly known African-American angel investors in the United States. Period. Now that’s not to say there weren’t more, but that’s all I could find. And I was like, well, okay, I’ll give it a shot. And I became an angel investor, put that title onto my name and LinkedIn profile that joined the Central Texas Angel Network which was one of the largest angel networks at that time. And then also I was the only African-American angel investor in the group at that time as well, at 125 angel investors.
And so through the mentorship at Capital Factory, Central Texas Angel Network, and then becoming an angel investor, I saw a lot of deal flow. And I was like, okay, well, you know, there’s this big gap that everybody’s been talking about, but I’m seeing it in a really, really big way. Where are the, you know, underrepresented founders and where are the women, you know, here or what’s going on? And so at that point it was just like, okay, you know, something’s gotta be done about this. You know, and now you’ve spent time talking to many in the Austin tech startup ecosystem to, to find out their perspective, what was happening, what were their experiences, talk to entrepreneurs. And just really realized that man, we’ve got a pretty big problem in the lack of diversity in the tech startup ecosystem. And I’m going to set out to do something about it. And so the concept of Divinc came out of, you know, “Hey, we’re going to go set out to go solve this lack of diversity challenge that we have in the startup ecosystem.” And you know, so I kind of stopped there.
Savannah Barker (05:09):
Yeah. So, so why Austin? I guess, you know, it sounds like you obviously had this, you know, you were at Capital Factory and then the Central Texas Angel Network, but Dallas and Houston are two cities that also have kind of their own startup communities and that are more diverse than Austin. So why did you choose to start Divinc in Austin?
Preston James (05:28):
Yeah, a few reasons for that. Number one, not because I was only here, right. I mean, I was, I’ve been living here for 15, 20 years at that time, but Austin’s startup ecosystem was rapidly growing, very vibrant, quite centralized if you will. And the resources and all the elements of a very strong startup ecosystem were here. Right. Even though it was still young and growing, if you will, they were here and not as much so in Houston, in Dallas. Yes there’s money there. Yes, there are corporations there. But as an ecosystem they were not as strong and as robust and as vibrant as it is in Austin. And so, you know, in thinking about that and like, okay, well, is this the place to really kind of tackle, you know lack of diversity in the tech startup ecosystem. Austin, based on its demographics here with 8% African Americans and, you know, relatively high percentage of Latino here, but, you know there’s still some challenges, right. And then also if you look at the demographics in terms of the progressiveness, and, you know, there’s a progressive community in Austin. And so you could kind of tap into that, you know, then we can do some things. And also by the same token with all of the success that Austin, you know, all the accolades that Austin was getting, there was still this pushing away of the African American community. And I did not necessarily want to just let that ride. Right. And so we thought, okay, let’s go ahead and try this here. And part of me thought, well, if we can do it here, we can probably do it anywhere, right? Because, you know with this very predominantly white leadership community, obviously if we can make changes here, we can make them anywhere. So Austin was the place to be.
Savannah Barker (07:48):
Awesome. So what would you say has been the most challenging or even just unique aspect of, of building Divinc? How is Divinc different than other accelerator programs, how is it similar to other accelerator programs? What are some obstacles that founders of color and women founders that you work with, that they’re having to deal with that maybe other founders don’t have to deal with? I’m just curious, kind of what that looks like.
Preston James (08:17):
Savannah, that’s a loaded question. So let me see what I can start with. So let me, let me start with the challenges that founders have and I’ll kind of get into the challenges that, you know, obstacles that Divinc has as well. So when, you know, when we were, when I was actually looking at putting Divinc together, what a lot of people don’t know is I tried to create a angel investment group first, because I thought if we can get, you know, wider problems with getting access to capital, that underrepresented founders and women face. I said, “Okay, well, if we can bring the capital, then we can, you know, then we’ll find the founders, the pipeline will be there. Unfortunately, it was not successful in building a critical mass of investors who wanted to invest in that, those demographics, but in the process of doing that, what I uncovered was people were coming to me as an angel investor and they were pitching their idea. And what I saw in general was that white males, the pitch, their pitches, the quality of their pitches, the quality of their businesses, were, let’s say at a level eight. And in general, not everybody, people of color and women were probably coming in at three or four. Okay. And I was like, “What’s going on? Why is this happening on a consistent basis? Why do we not know the language, the jargon, the requirements of, you know, coming in to get investment? Why do we not know that? And the white guys do, you know, for the most part.”
And I looked around at Capital Factory, I looked around at some of the accelerated programs around town, which were some great programs. And we were not getting into those programs, right? And people were, you know, obviously mad – “I didn’t get in and they didn’t even know, they’re racist. They don’t -whatever, right?” So it’s like, you know, well, no, you didn’t get in because if I compare your business to this business here, it’s not ready. You know? No, no, one’s going to be comfortable and confident to write a check for your business because they don’t have the information they need to get comfortable and confident, right? And so there’s this disconnect that, you know, you may not understand, the founder may not understand what’s needed. And so automatically they’re just sort of cast to the side. “Oh, they just don’t know.” And so why don’t we know? Well, if you look around the coworking spaces in town, there weren’t a whole lot of people of color walking around in those co-working spaces. There were very few of us. I mean, I think it was 2017 when Techstars Austin had the first African American founder in their program, 2016, 2017, and that’s a very progressive program, right? But that’s Austin for you, right? And so what would it take to get into those programs? So I saw, what I heard and what I saw, was this gap was not being addressed. This early stage gap for entrepreneurs. And entrepreneurship being as hard as it is anyway, right? And then you also have this gap on top of that, you know, it was like, gosh, we got some work to do. So we wanted to fill this gap to help founders of color and women. And that is access to some of the education and resources like mentors and, you know, web developers and designers, all kinds of subject matter experts, access to serial entrepreneurs, access to investors, right? So how do we create that environment for this early stage, these founders who are not necessarily getting these opportunities. And I find that to be really critical and essential through my conversation.
So Divinc was designed to fill that gap, right? And we want to provide that, that pipeline so that their next step, they can either continue to build their business by bootstrapping it, or they can go and get investment, or they can go into another accelerator program after they can compete on a more level playing field, right? To get there. So in terms of challenges for Divinc, we set up as a nonprofit and most accelerators are for-profit. So for us, the reason why we did that is because we need to figure out, well, how do we make this a for-profit thing? And one of the things that we took away was, you know, we’re not charging a fee up front for our founders. Why? Because that’s, that’s one of the barriers to entry. So we gotta take that off. But what about skin in the game? Oh, they got skin in the game, they got skin in the game. The other thing was, you know, do you take equity, you know, in the companies. Sure, we could, but equity wasn’t going to pay the bills early in the early days, right? And so we said, okay, let’s build this as something that we want to have happen in the community. Right? This is not going to be charity work, right? This is going to be work to really enhance our startup ecosystem by making it more inclusive of people of color and women who traditionally were not getting an opportunity. And so I know we had some skepticism, you know, in the early days, like, okay, well, yeah, it’s a good attempt. But there was a spirit of Austin that said, yeah, we really need this. And we really want to support it. And so we got a lot of great emotional support behind us. The next biggest piece was, you know, how do we, how do we fund this to become sustainable, right? And getting, you know, the community and corporations and the university to get behind it and not just emotionally, but also from the financial perspective. So those have really been, you know, the early challenges, I mean, but in terms of the program itself and the impact that we’re providing, it’s been awesome. It’s been absolutely awesome. So, you know, but we continue to have those challenges as we go forward. But I think the more success that we have, the more impact that we have, the more people can see the value that it provides to the Austin community as a whole, I think we’ll, we’ll, we’ll get to that point where we’ll be scaling.
Savannah Barker (15:28):
Awesome. And before we kinda dive deeper into the accelerator, I would just love for you to define diversity, equity, and inclusion. Those are words that we hear a lot. Some would call them buzzwords. But I found that different people have different ways that they choose to define those words. So I would just love to hear your take on that.
Preston James (15:49):
Yeah. So you catch people at different moments, but I I’m going to start it with: it’s culture and it’s communities where everyone, every person is provided a unbiased, unrestricted, unfiltered access to resource and opportunities, right? Regardless of their race, their religion, their gender, whatever other status that they may have, that’s what it is. And I, and I started off with culture and community specifically because that, you know, diversity, equity, and inclusion is not a check box number. Oh, we have three African Americans and three Latinos and five women. It’s not that. It’s the culture and community where all of that is really kind of blending together for the good of something better, if you know what I mean. And you’re accepted for the differences that you bring to the table. Actually your differences are valued and that’s what the culture in that community has to be. And so that’s how I define diversity, equity, and inclusion.
Savannah Barker (17:04):
Awesome. So you just finished accepting applications for your fifth cohort. What have you learned with each cohort? How have you iterated your program or your curriculum with each cohort?
Preston James (17:20):
Starting off, we had an amazing journey, right? So when we first wanted to create our curriculum we said, okay, well, let’s go see what’s out there. And my buddies, you know, Amos Schwartzfarb and, and Jason Seats at Techstars were really early supporters of Divinc and wanted to emulate, you know, one of the best accelerator programs in the country. And, but we knew we wanted to put a twist on it, right? And that twist had to be, you know, back to my point about the culture and community, that is what we put into our program in addition. So really we have an educational component, which kind of addresses the best practices, know how to build a successful high growth business. So the “how-to,” right? And that’s everything from your business model, revenue model, you know, how are you engaged with mentors? Right? It’s the marketing, it’s the branding, it’s the financial projections, it’s the market research, through the entire 12-week program. So basically one or two educational workshops a week. It’s also a mentorship, right? So a great value to entrepreneurs in general, especially underrepresented founders is getting access to the network, the human capital, social capital, if you will. They’re coming in, meeting people they never would have ever met, right? That are helping them with their business because they have been there, done that and are subject matter experts. So we do a lot of mentorship.
We also do professional pitch coaching every week, which is, I think it’s a beautiful thing because many of the talent, many entrepreneurs in general, right? I mean, startup entrepreneurship is hard. Entrepreneurship is just hard, period. Right? So, you know, to be able to come out of your space, where you may have been a PR person or a teacher, or whatever, to be able to get in front of people, groups of people and be able to articulate your business or what you do, your value, who you are. Right? To be spot on with that articulation is hard to do. And it does take some coaching and training around that. So the pitch coaching is more it’s more important, it’s more than just demo day, right? It’s, “This is how you’re going to need to communicate.” The other piece that we bring in is sort of a KPI session, which basically instills accountability and focus for our entrepreneurs. Entrepreneurs can be creative. They want to be, they want to conquer the world so they easily, their mind starts going all over the place and we have to bring that focus back in. And so the KPI sessions really instill our best practices around how do you focus on the critical few things that you need to do to move your business forward, right? And that’s a huge value. And then also we culminate all of that with a demo day, and then we continue on after they finish their three month program, where we’re already iterating if you will, is enhancing those workshops that we do, adding some new things in and taking some old stuff out. And we’re also adding an alumni program, which is more formal now where we’re supporting them from the three months beyond. It’s an ongoing alumni program. So really getting focused and matching up the founders with the resources that they need to continue their progression, right? To the next stage of their journey. And that’s really, really critical. We took feedback from our founders and we said, okay, we’ve got to do this because this 12, 15-month mark, after they finish our program is super, super critical, you know? And then we’re also looking at another expansion to the program where the people who we’re not accepting into the program, but they’re talented, they’re just early. And they haven’t yet gotten to the ideation, validation process of their idea. And they don’t know how to, so we want to provide a virtual platform with a community to help them build that. So we’re building that pipeline on a large, high volume, so we can continue to move forward. The biggest differentiator for us is that, you know, and it’s hard to measure, so I’m going to say this and people are gonna be like, “Oh, okay, that sounds good.” It is the culture. It is the community of support. You have a family.
I had a call today with an entrepreneur and he was like, “Man, it is mind-boggling the value that Divinc brought to my entrepreneurship journey.” And that’s, I can’t quantify that. He said, “But you have to know that Divinc has, what Divinc has done for me, my family, my ability to build my business successfully, the family that I had built with other cohort participants and alumni, I can’t put a number on it, but that is different from any other program I’ve attended.” And so with that, I think the impact of what we’re doing is not only are we increasing the number of underrepresented founders, but they are also going out into their communities and they’re serving as mentors and leaders in other organizations and sort of raising the bar and providing inspiration to others. Thus our startup ecosystem, it becomes more inclusive because of that participation and interaction with those who have been predominantly present in the startup ecosystem. So now it’s a beautiful thing because white males who are looking for, or may not even be looking for underrepresented founders, get to interact with them and they get a new perspective on what the financial opportunities are for them, right? And so the ecosystem broadens out the impact of the founders and the community that we’ve built just resonates and permeates throughout and over time. You know, we continue to build that inclusion.
Savannah Barker (24:37):
And you mentioned Amos and Jason at Techstars. Are there some other movers and shakers, whether they’re investors or founders in this space that you think are doing a really good job on this front.
Preston James (24:48):
Savannah Barker (24:51):
No, it doesn’t have to just be Austin.
Preston James (24:54):
There are a lot of movers and shakers. When I look at Austin, you know, you have Wild Basin Investments, you have Impact Hub. I do believe that, you know, Capital Factory has made some, you know, great efforts to move things forward. Hello Alice up in Houston. And there are, you know, a wealth of organizations. Sputnik here in Austin. I mentioning The Riveter with women initiative that’s going on, Notley Ventures has been a tremendous partner. And I think they are really putting a stake in the ground to really focus on, on impact to move things forward. I have a, you know, a list of people, you know, or Harlem Capital, Backstage Capital, Cross Culture, Springboard Enterprises, Digital Undivided for women. They’re doing some fantastic things. TXV partners with Marcus Stroud here in town. And I can go on and on. I’m probably going to get in trouble for not mentioning somebody, you know, but I mean, there are organizations, there’s movement. So I think people are getting it, individuals and organizations are getting it. I think people are struggling to figure out how, and we can talk about that more.
Savannah Barker (26:22):
Yeah, yeah. And, and you, you mentioned Notley and obviously, you know, Divinc has this partnership and ongoing relationship with Notley that, you know, our focus is all about scaling and sustainability. And so I’m curious, it’s early in that relationship, it’s only been a few months. I think it was February when that started, but how have you seen that impact the work that you’re doing?
Preston James (26:47):
I think it’s been awesome for us. And it’s really interesting because, you know, Dan and I have probably known each other three years. I mean, when I was kind of getting started with Divinc. And I remember going early to him and I was like, you know, the way the meeting was going at that point, I was like, you know what, let me just go back home and get my stuff together. I’ll come back to you over time, you know? Cause it was early, I was still trying to figure things out, but he was really good in providing some guidance and direction. And I would always touch base with him every now and then. And then he came back and he was like, “Hey, I really like what you’re doing. I want to help.” And then we had this partnership agreement discussion and it’s been great because it’s not just about funding, right? It’s about providing support and advocacy for what we do and wanting us to be successful. Wanting us to scale and be sustainable and maximize impact. And so that’s Dan’s thing, right? And he’s just kind of beating that and it resonates totally with what we’re doing. And so he’s the ideal person we want, you know, working with us and partnering with us to go make things happen. And that’s how we operate. We want partners like that, you know? And so we got more Dan Grahams out there? Come on, let’s go.
Savannah Barker (28:15):
And how would you describe, you know, you mentioned, it’s not just about the funding. And I think that really is important. Obviously the funding piece is huge for any nonprofit. But there are so many other areas that nonprofit organizations or social impact organizations need help with or need support in. And you’ve talked about the championing of the cause and the advocacy, but what are some other ways that you’ve seen that?
Preston James (28:37):
I mean, you know, all of our mentors, right? Our volunteers. People who have services, organizations like, you know, law firms, small boutique law firms or accounting firms or whatever, they can provide pro bono services to the entrepreneurs. They can do that for Divinc too, but but you know, everybody has an expertise, you know, and it’s like, just come in and come on in and say, “Hey, how can I help?” And we will find a place, a person or a project for you to work on. There’s so much to be done. We have college students, high school students, working with us. They’re gaining experience business experience. Also, Hey, what does it take to be an entrepreneur type of experience. Last cohort we had the pleasure of working with four UT MBA grad students. And they were absolutely awesome. They volunteered their time, anywhere between five and 12 hours a week, they helped us so significantly. I mean, they became part of the team. So there’s a lot of ways to come on in and really help and move the needle because the mission is at the end of the day, we want as many underrepresented founders and women building high growth, scalable businesses as possible. If I could wave a magic wand, I would, you know, try to create, you know, a thousand per year, if I could. But one step at a time.
Savannah Barker (30:21):
And with that, that is all the time we have for today. Thank you Preston for taking the time to come into our studio and talk about Divinc and quickly, how can listeners get involved with Divinc?
Preston James (30:33):
Reach out to me, [email protected]. And just send me a note and say, “Hey, I want to get involved” or “How can I help?” or “How can I partner?” And just reach out to myself and my team and we will make it happen.
Savannah Barker (30:51):
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