Applicants will be notified of their acceptance by July 25th. For 8 weeks, between August 1- Sept 30th, participants are expected to commit up to four hours per week to attend content sessions, featured discussions and workshops. Although there is no required time commitment for independent work, participants are highly encouraged to work on their business in between sessions. Note, sessions will be recorded.The program will culminate with a $200k pitch competition for top participants.

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Over the past years, we have been working to refine a high-impact way to structure the Black Ambition prize competition 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. Black Ambition will 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.

If you would like more information on SAFEs, feel free to use the following links here and here and please consult with a financial advisor or other knowledgeable investors or entrepreneurs

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 Hispanic 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.

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 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.

Black Ambition will provide a broad range of applicants with support to refine and improve their ventures. All eligible applicants will receive access to an online community platform — which includes access to entrepreneurship content and a network of experts.Additionally, we provide access to monthly office hours and Ask Me Anything sessions, access to exclusive business events, and curated learning opportunities with our corporate  partners.