Frequently Asked Questions
FAQ
Most frequent questions and answers
The Raynier Institute & Foundation (“donor”), a Seattle-based philanthropic organization with Philadelphia roots, has partnered with Drexel University and the University City Science Center to improve access to capital for minority entrepreneurs in the area. The institutions will collaboratively manage a seed fund created by a $500,000 grant from the Foundation, founded by an heir of Philadelphia transportation and real estate magnate Peter Widener and supports programs of high merit for the betterment of humanity.
The Fund is intended as a step toward addressing persistent inequality in minority business ownership by providing access to funds, guidance, and networks early in the entrepreneurship process. A recent study by a pair of venture capital rating groups suggests that while the disparity in startup funding has been improving, the fact remains that over the last five years, less than a quarter of new businesses have been started by minority entrepreneurs.
Drexel holds the investments and manages all returns to be reinvested in the Fund per donor agreement. This is also known as an “evergreen” fund, and Drexel does not benefit from returns into the fund.
A three-person Executive Committee consisting of representatives from the Science Center, the Close School, and Drexel’s Office of Research & Innovation is responsible for the Fund’s oversight and donor relations. A three-person Operations Team comprised of representatives from those same organizations has been formed as a working group responsible for building and executing the program strategy. Other individuals from those respective programs are also engaged in the program’s operations.
The Operations Team is responsible for designing the overall program strategy, building a Community Partners Group, creating the application and evaluation process, and communicating program progress to the Executive Committee (who will correspond to the donor.) The Operations Team also led the efforts to ensure that the funding approach was fully vetted from a legal, tax, and compliance perspective.
Shintaro Kaido (Drexel’s Office of Applied Innovation)
Chuck Sacco (Charles D. Close School of Entrepreneurship)
Eamon Gallagher (University City Science Center)
Troy Wilford (Drexel’s Applied Innovation).
Our Community Partners will help evaluate applicants seeking capital and connect them to entrepreneurial support resources. Members will be invited based on a history of cultivating and supporting minority entrepreneurs.
The current members include:
- Ben Franklin Technology Partners
- Community College of Philadelphia
- Drexel University Center for Black Culture
- Economy League of Greater Philadelphia
- Founders First Capital Partners
- PACT
- PCI Ventures
- Penn HealthTech
- Philadelphia Hispanic Chamber of Commerce
- Philly Startup Leaders
- Temple University Small Business Development Center
- The African American Chamber of Commerce
- The Enterprise Center
- The Welcoming Center
- Thomas Jefferson University
- True Search
- West Philadelphia Corridor Collaborative
- Zenith Wealth Partners
The role of Community Partners as entrepreneurial resources providers is critical to the program’s success, and the program will not be able to realize its true value with them. Outreach to prospective Fund applicants. We expect at a minimum that Community Partners will:
- Identify entrepreneurial support resources that their organization might be able to provide to applicants and awardees
- Provide resources and mentoring as appropriate to awardees and some applicants
- Identify applicants to the program (initially 3-5 per Partner)
- Identify reviewers who will blind-review the initial applications
Qualified applicants to the program are defined as “Underserved founders” using the National Institute of Health Diversity definition at https://diversity.nih.gov/about-us/population-underrepresented.
Additional criteria include:
- The applicant should be a for-profit C corporation (see additional note below regarding LLC’s) headquartered or willing to work/operate within the 11-county Greater Philadelphia region. Cities in the region include those in the list at https://support.crunchbase.com/hc/en-us/articles/360010017633-What-cities-are-in-the-Greater-Philadelphia-Area-region
- Startup or early-stage company that has not progressed beyond an early seed round of funding
- Experienced team with at least one member of management working full time
- Product or service does not violate any local, state, or national law
Simple Agreement for Future Equity (SAFE), uncapped
Drexel University has only qualified to-date the SAFE for C Corporations as an investment vehicle from a tax, legal, and compliance perspective.
The Operations Team is making available optional legal assistance from a designated Community Partner law firm to convert from an LLC to a C Corporation for any investment recipients. Recipients may also choose to use their own legal representation for this work. Assistance for conversion back from C Corporation to LLC will also be made available.
The Fund will invest $25,000 per startup, in up to four startups per cohort, and up to three cohorts per year until all funds are exhausted. Returns into the evergreen fund, if any, may extend the life of the fund.
Applicant referrals will come from Community Partners, who will be provided an application link using the Submittable platform and hosted by the University City Science Center.
Once applications are received, Community Partners reviewers will evaluate the submitted materials and make recommendations for a final round of presentations and interviews.
The Operations Team will interview a select set of finalists and make a final determination of investments.
The Operating Team will be responsible for notifying awardees and those who were declined. Those declined should be offered access to certain entrepreneurial support resources through Community Partners.
Additional steps in the investment process will include:
- The Operating Team will submit an Investment Memo & Request to Drexel’s Office of the EVP, Treasurer & COO
- Awardees will need to be further vetted through a due diligence process
- After due diligence, awardees will execute a series of documents following the due diligence process and before receiving the Fund investment
- Drexel will then distribute the funds.
Awardees will be required to submit an update report to the Operating Team annually.
The following are potential measurements that the Operations Team may track for purposes of reporting back to the Executive Team and the Raynier Foundation:
- $’s distributed
- $’s returned
- # of investments
- Types of businesses
- Entrepreneurial support resources provided
Applications will be taken for approximately four weeks. Another four weeks will be taken for initial and final review process, with selected Fund recipients notified when the process is complete. The investment distribution by Drexel will occur after all due diligence and legal work is completed and may vary by recipient.
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