Frequently Asked Questions
The Black Ambition HBCU Prize and the Black Ambition Prize differ in eligibility criteria and the amount of funding available. The maximum amount of funding for the HBCU Prize is $100,000. The maximum amount of funding for the Black Ambition Prize is $1,000,000. Teams selected for either prize will receive similar coaching, mentorship, and peer learning opportunities.
For Black Ambition HBCU applicants:
- Eligible early-stage businesses will compete for up to $100,000.
- In addition to awards to teams, the school with the winning prize team will receive a grant of $50,000 to support entrepreneurial programming on their campus. Funds can be used to fund local pitch competitions, coordinate mentorship programs and organize guest speaker events and business visits, among other activities.
For more information on the prize eligibility, look at the sections titled “Application Eligibility” and “The Black Ambition HBCU Prize” in the FAQs below.
For Black Ambition Prize applicants:
- Eligible early-stage businesses will compete for up to $1,000,000.
For more information on the prize eligibility, look at the sections titled “Application Eligibility” and “The Black Ambition Prize” in the FAQs below.
Over the past few months, we have been working to identify a high-impact way to structure Black Ambition’s prizes for entrepreneurs – with the goal of providing exceptional entrepreneurs with significant capital to scale their ventures. After significant discussion with our attorneys about the impact of this approach on Black Ambition’s charitable purpose and applicants, we finalized the terms for this year’s prizes:
- All awards will be given in exchange for a simple agreement for future equity (SAFE) instrument, with the potential exception that awards for the Black Ambition HBCU Prize below $100,000 to current students may be grants
- However, Black Ambition will only count 50% of the prize award, up to a maximum of $250,000, toward the Investment Amount in the Black Ambition SAFE – in other words, 50% of the award will not provide economic value to Black Ambition
- The venture must be validly formed as a legal entity (e.g., C Corporation, LLC, etc.) within sixty (60) days of completion of Financial Counseling that is provided to prize winners after Demo Day and convert to a C corporation at or prior to its initial Equity Financing.
A SAFE is a convertible equity security that allows the investor to buy shares in a future priced round based on the price of the future round, rather than at a predetermined valuation. In other words, it is a way for an investor to acquire equity in a company at a future date in exchange for their investment now.
We believe the SAFE offers numerous advantages to the prize winners:
- Ongoing relationship with Black Ambition: recipients of an equity investment would have an ongoing connection with Black Ambition. The success of award winners would help to support future prizes for Black and Latinx entrepreneurs. At the same time, we have chosen to provide generous terms to the applicant.
- Positions companies for the next step: Having Black Ambition as an investor means that entrepreneurs would already have received their first investment. We spoke with two accelerators and indicated that an equity investment would make the company even more attractive to an accelerator. Also, entrepreneurs can attract co-investment from others on the same terms (with all new third party co-investor capital in addition to Black Ambition’s capital being considered the Investment Amount).
- Tax liability for award recipients: cash grants may be taxable as ordinary income, whereas equity investments would likely not be taxable. Note that start-ups may have losses that they can use to offset the cash grants from a tax standpoint. Please consult a financial or tax advisor for more information.
We have confirmed with counsel that giving a cash grant to a Black or Latinx entrepreneur does not in itself meet the charitable purpose required for grantmaking. Let’s say the Black entrepreneur was middle or upper middle class. The color of one’s skin alone does not qualify as a charitable purpose. As a result, all awards will be SAFE instruments, with the possible exception that awards below $100,000 to current students may be given as grants for educational or sponsored research purposes. In addition, as noted above, a cash grant would not create a vehicle for co-investment and may have adverse tax consequences.
To ensure we are maximizing the amount of resources we are providing to Black and Latinx entrepreneurs, Black Ambition will only count 50% of the prize award, up to a maximum of $250,000, toward the Investment Amount in the Black Ambition SAFE. In other words, 50% of the awards below $1M will have the economic effect of a grant and $750,000 of the $1M award will have the economic effect of a grant.
As we worked with legal counsel to define the terms for the SAFE instrument, we took multiple steps to ensure the terms are founder friendly beyond what’s typical, including:
- Black Ambition will only count 50% of the prize award, up to a maximum of $250,000, toward the Investment Amount in the Black Ambition SAFE. In other words, 50% of the awards below $1M will have the economic effect of a grant and $750,000 of the $1M award will have the economic effect of a grant.
- We have established a Valuation floor of $4 million. This floor caps Black Ambition’s potential ownership.
- The Valuation floor means that, in an equity financing, if the Company receives a post-money valuation that is below $4 million, Black Ambition’s investment amount would be calculated based on a $4 million valuation, thus capping the amount of ownership Black Ambition would receive.
- We will use a post-money valuation (as opposed to a pre-money valuation) for the SAFE for simplicity of conversion calculation.
We are also using a 15% discount for the SAFE, which is lower than what is typically used. SAFE investors typically get a discount on the price of future shares. This discount is an incentive for an investor to invest early in a company, which is typically a riskier investment. We have decided to use a lower discount than is typical for SAFE instruments to provide favorable terms to entrepreneurs, but still within “market” discount range.
For further clarity, consider the following scenarios:
Example 1: The Rapido team is awarded a $100,000 Black Ambition prize. First, this team must have an entity validly formed under law within 60 days after Financial Counseling that is provided after Demo Day to be eligible to receive the SAFE investment. The Company must also agree if it is not a C Corporation to convert to a C Corporation at or prior to an Equity Financing to be eligible for the SAFE investment. The Company issues a SAFE instrument to Black Ambition in exchange for the $100,000 prize. Black Ambition will receive an economic return on 50% of the Investment Amount. Let’s say that Rapido attracted interest from Venture Capitalists at Black Ambition’s Demo Day. Rapido is offered an investment of $1 million (plus Black Ambition’s $50K Investment Amount) on a pre-money valuation of $5 million for its Series A investment round. Black Ambition would receive a 15% discount on this round given it was the first money in. Rapido’s post money valuation is $6 million. Black Ambition only calculates its ownership conversion based on 50% of the prize. Black Ambition would receive an ownership of $50,000 divided by 85% of the price per share paid by the Venture Capital firm.
Example 2: Southside LLC is awarded the $1,000,000 Black Ambition prize. First, this team must have an entity validly formed under law within 60 days after Financial Counseling that is provided after Demo Day to be eligible to receive the SAFE investment. The Company must also agree if it is not a C Corporation to convert to a C Corporation at or prior to an Equity Financing to be eligible for the SAFE investment.Southside must agree to convert to a C Corporation at or prior to an Equity Financing. The Company will issue a SAFE instrument to Black Ambition of $1 million and use the money to accelerate Southside’s business. Southside attracted a major firm that is prepared to invest $3M in equity at a pre-money valuation of $10 million. Black Ambition will receive an economic return on $250K of that prize. The post-money valuation is $13.25 million ($10M pre-money, plus $3M investment, plus $250,000 Black Ambition prize investment). Black Ambition will receive equity ownership of $250,000 divided by 85% of the price per share paid by the Venture Capital firm.
Black Ambition will provide a broad range of applicants with support to refine and improve their ventures. All eligible applicants will receive access to Ureeka — which includes access to entrepreneurship content and a network of experts — as well as written comments on their application.
Semi-finalists will also be eligible to participate in a 3-month peer-to-peer mentorship program facilitated by seasoned entrepreneurs.
In addition, finalists will have access to 1-1 mentorship and coaching to develop a strong pitch for their ventures to judges and potential investors.
Demo day is when finalists will have the opportunity to share their ideas with judges and potential investors. Black Ambition will host demo day in November 2022.
For the Black Ambition HBCU Prize, entrepreneurs do not need to have a venture validly formed under law to apply. Please note that all prize winners that receive a SAFE instrument will need to create a venture validly formed under law within 60 days of Financial Counseling, which will be provided to prize winners after Demo Day. The exception will be for prize winners who are current students and win less than $100,000 – those winners will be eligible for educational or research grants and do not need to form a legal entity.
For the Black Ambition Prize, entrepreneurs will need to have ventures that are validly formed under law to apply.
All prize winners who receive a SAFE instrument will need to agree to convert to a C corporation, if the entity is not already a C Corporation, at or prior to its initial Equity Financing to be eligible for the SAFE.
We will be asking reviewers to uphold a code of conduct based on Black Ambition’s principles and values, including respect for applicants’ submissions. We will not ask reviewers to sign an NDA. This is in part driven by the fact that NDAs are difficult to enforce in the entrepreneurial space, as it is difficult to pinpoint the specific sources where individuals learned about specific information.
Businesses in the field of consumer products and services*, healthcare, technology, Web 3.0 ventures, and/or media and entertainment are eligible to apply.
- Consumer products and services – “businesses that sell goods sold to consumers for their own use or enjoyment and not as means for further economic production activity” (Source: Investopedia)
- *Consumer products include consumer packaged goods, home goods, food/beverage, and fashion/apparel, but does not include music
- Healthcare – “businesses that provide medical services, manufacture medical equipment, provide medical insurance, or otherwise facilitate the provision of healthcare to patients”
- Tech – “businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology” (Source: Investopedia)
- Media & Entertainment: businesses focused on meeting consumer needs in creative industries inclusive of cinema, television, radio, theater, publishing, gaming, advertising and music.
- Web 3.0: businesses offering web-based products or services that leverage artificial intelligence, speech recognition, the metaverse, cryptocurrency, NFTs, and/or augmented or virtual reality technologies to empower internet users to search for, organize, and process data.
Note: Black Ambition is not focused on highly capital-intensive businesses that require significant long-term investment (e.g., biotechnology, pharmaceuticals)
Consult your team members, take into account your collective experience, and decide which prize is best for your company at this moment. The HBCU Prize is meant for entrepreneurs currently attending, or recently having attended an HBCUs, while the Black Ambition Prize is available to all eligible entrepreneurs. Also, be advised the grand prize amount for the Black Ambition HBCU Prize is up to $100K, and the grand prize for the Black Ambition Prize is up to $1M.
Yes, though at least one founding member must be headquartered in the U.S. and the business(es) must be based in the U.S.
Black Ambition prizes are designed for teams of two or more. A team member should be an individual playing a critical role for the venture (e.g., employee, essential contracted support) with responsibilities for specific work streams or deliverables for the venture
- You can participate on a maximum of 2 teams. We allow individuals to be on a maximum of two teams, except for the lead, who can only be on one team.
- If an individual who is not a lead is on 3+ applications, then Black Ambition will keep the first two submissions.
- We also recommend that founding members refrain from submitting more than one application given the time requirements of leading a team throughout this process.
- A lead is defined as the CEO or President.
- If there is no CEO or President, the most senior role on the founding team will be the lead.
- If there are multiple members with similarly senior roles on the founding team, you will self-select your lead.
- If there are 2+ submissions by a single lead, then Black Ambition will keep the first submission.
No, applicants that apply to both prizes will not be considered.
No. For-profit companies with a social impact are encouraged to apply, and will be evaluated on the same criteria as other companies.
Please submit all applications in English.
We will not accept any applications submitted after the deadlines. Please make sure you submit your application before the relevant deadline.
As long as your venture does not exceed the current dilutive funding or revenue thresholds on Demo Day, you will still be eligible. If your venture does exceed those limits, you will no longer be eligible for the prize.
If you do not receive funding and still meet our eligibility criteria, you can reapply next year.
Yes. Please review the remaining eligibility criteria to ensure you are eligible to apply.
In addition to thoroughly reading through this FAQ section, the following resources can provide a perspective on what to consider when writing your application :
Strong applications will clearly articulate the following elements of their venture:
- Problem and Solution: Have you identified an important and unmet need, paired with a compelling solution that addresses the problem? What insight can you provide for where the world is heading, and through your concept or venture, in what ways might you be moving in another direction that represents a better* future for more people? (*easier, more sustainable, faster, etc.) For some prizes, this includes a clear description of the minimum viable product or working prototype.
- Addressable market and distinctive market position: What is your addressable market, and how big is it? How are you poised to serve this audience (and compete with other businesses)?
- Business Model and Customer Acquisition: What is the plan to acquire new customers or users, distribute the product or service, and generate revenue. What are the current metrics on month-to-month growth and traction (if pre-growth, what is your plan to measure and scale the business)?
- Quality of Team: Who is helping you build your vision? What makes them a dedicated and creative founding team with the experience or skill-sets to succeed?
A Minimum Viable Product, as defined by Eric Reis (the author of Lean Startup), is a version of a new product or service (e.g., product design/sketch, wireframe, demo video, landing page) that will allow your team to collect the maximum amount of validated learning about customers with the least effort.
If you are applying for a prize that requires an MVP, we encourage you to visit the following resources:
- Agile Alliance
- A Minimum Viable Product Is Not a Product, It’s a Process by Jim Brikman from Y Combinator
- How to Plan an MVP by Michael Seibel from Y Combinator
The Black Ambition HBCU Prize
Black Ambition recognizes that HBCUs are vital engines of economic opportunity and have rich legacies to build upon. Furthermore, if Black Ambition did not tap into the vibrant and brilliant HBCU community, it would miss a differential opportunity for investment capital that could spark and support the next generation of successful entrepreneurs.
Black Ambition’s HBCU Prize will inspire members of the HBCU community to pursue entrepreneurship and provide both funding and support to launch successful businesses. Just as institutions like Harvard, MIT, and Stanford can provide significant resources available to aspiring entrepreneurs, Black Ambition aims to partner with HBCUs to provide the same opportunities to members of their community.
Eligible teams must include at least one of the following as a member of the founding team:
- A current HBCU undergraduate or graduate student (full-time or part-time*)
- A recent alum within 2 years of graduation
- A former student within 2 years of attending the institution
- The founding team must include at least one HBCU-affiliated team member who identifies as Black/African/African American and/or Hispanic/Latino/a/Latinx.
- A member of the founding team is defined as having a Vice President or C-Suite level role (i.e., the CEO or an executive-level direct report to the CEO).
*Part-time students must have completed at least one year of course credits by time of application.
The Black Ambition Prize
Eligible teams must have at least one member of the founding team who identifies as Black/African/African American and/or Hispanic/Latino/a/Latinx.
A member of the founding team is defined as having a Vice President or C-Suite level role (i.e., the CEO or an executive-level direct report to the CEO).