Derek Smith The founders of Plug In South LA grew up in South Los Angeles and saw firsthand the frustrations of economic underdevelopment. That’s why, after spending the first part of his career in New York, he decided to return home in 2015 to start a startup incubator in his old neighborhood.
He hopes to help aspiring entrepreneurs learn the secrets of growing new ventures and, in the process, hopes that building those businesses will help bring higher-paying jobs to the area.
Smith already knew that founders from historically underrepresented groups face greater challenges in accessing funding. In 2023, funding for Black founders dropped to an all-time low for the third year in a row — and it was pretty paltry to begin with. According to Crunchbase data, black founders accounted for just 0.48% of total venture capital investment last year, accounting for just $661 million of the $136 billion allocated.
This is a significant institutional barrier. That’s why Smith’s ultimate goal for Plug In South LA is to pave the way for Black and brown entrepreneurs looking to build tech startups and need help and guidance. Not only does this help them become successful businesses, it also helps them create wealth and create jobs in areas where the startup ecosystem often lags behind.
“We really want to support founders and entrepreneurs who can build broadly scalable businesses,” Smith told TechCrunch.
Like many startup incubators, Plug In participants participate in a 12-week program that includes about five hours per week outside of their regular jobs to run the company. The program includes weekly workshops and more for industry-specific groups, as well as advice from those in the tech community who work with each group, such as financing options reviews, the importance of storytelling, financial planning and more . The program concludes with an investor demo day.
Smith sees a pool of underutilized talent in areas like South Los Angeles. He hopes that by helping incubate these companies, as they scale and succeed, they will share his broader vision of giving back to society by creating jobs and supporting talent in underserved or neglected communities. For him, the idea behind the company comes down to economic development and building a network of entrepreneurs, rather than relying on help from outside forces.
“Politicians don’t want to do the job. This [big tech] The company doesn’t want to do the work. Entrepreneurs have to do this. That’s why we have to find entrepreneurs who fit this broader vision,” he said.
Vaughn Blake, a partner at Blue Bear Ventures, said he met Smith after he launched Plug In South LA and was invited to participate in a panel during an early demo day. “When I realized what Derek was doing and realized that Los Angeles needed this type of organization and guidance, I was excited to get involved,” Black told TechCrunch.
Smith spent some time building the organization. For the first few years, leading up to the first official Plug In South LA cohort in 2020, he ran monthly and quarterly programs focused on helping diverse founders in the early stages of their startups. Those programs eventually evolved into today’s more formal accelerator programs, Smith said. He is currently recruiting for the incubator’s fifth cohort, which will include 12 to 15 participants later this year, depending on how many companies he chooses.
One of the most successful companies to emerge from the incubator to date is ChargerHelp, a platform designed to help field technicians troubleshoot and repair broken EV charging stations. The founders participated in Smith’s accelerator program in 2020 shortly after the company was founded.
Kameale Terry, co-founder and CEO of ChargerHelp, said the experience was invaluable and provided her with specific help, such as perfecting her own promotions. She attributes the $17.5 million in Series A funding, at least in part, to time spent in the incubator. The company has raised more than $20 million to date, according to Crunchbase data.
As part of its broader goal of creating jobs in the community, ChargerHelp has also been successful in this regard, growing from about 12 employees when it joined the program to nearly 45 today.
One of the strengths of the program, Terry said, is that there is a network of people of color who all face the same challenges, and that network continues to grow and provide support long after participants leave the program. They help. “This program is fun because I can find people with similar life experiences where I can get help and help. It’s really cool to be a part of it,” she said.
In addition to ChargerHelp, some of the other companies emerging from the program include SwayBrands, a platform designed to help diverse creators connect with agencies and brands. Smith said the startup has raised nearly $2 million. Another is ThriveLink, which created a product that uses artificial intelligence to help underserved patients find and apply for the social services they need. Smith said the company has partnered with several major health insurance companies on pilots.
Until recently, Smith had not invested directly in companies that went through the program due to a lack of capital, but that is changing with future cohorts as companies move from free to equity-based models.
“We are looking at providing capital solutions with an adjacent fund that we are launching that will invest in our team and we will hold 5% of the companies and make follow-on investments based on that equity,” Shi said. Mies said.
