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Frequently Asked Questions

General Questions

We know there are great business ideas that don’t surface in traditional investment processes. The Prize competition provides an opportunity for a broader set of entrepreneurs to share their ideas, and can spark innovation and dialogue across participants, audiences, and investors that would otherwise not be connected. The Black Ambition Prize is designed to benefit a broad range of applicants beyond those that receive funding — hundreds of teams will get access to peer support and mentorship to refine their ventures, and all eligible applicants will receive feedback on their idea.
Each step of Black Ambition is designed to support founding teams from backgrounds that are frequently underrepresented in venture capital, with a particular focus on Black and Hispanic founders across all genders and orientations. This includes reaching out to networks focused on inclusive entrepreneurship, recruiting a diverse pool of application reviewers and mentors, and reducing traditional bias levers at each stage. In addition, Black Ambition asks all applicants to sign the Black Ambition Founders’ Pledge — a commitment to build diverse and inclusive companies, invest in others, and positively influence the entrepreneurial landscape — to ensure that these values are carried forward beyond the Prize process.
  • Eligible growth-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 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 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.

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.

We have confirmed with counsel that giving a cash grant to a Black or Hispanic 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 Hispanic 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 an online community platform — which includes access to entrepreneurship content and a network of experts.

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 2024.
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.

 

Application Eligibility

For profit businesses in the fields of consumer products and services*, healthcare, technology, AI, 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”
  • *Consumer products include consumer packaged goods, home goods, food/beverage, and fashion/apparel, but does not include music
  • *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.
  • AI: businesses that leverage  computer software that engages in humanlike activities – including learning, planning and problem-solving.
Note: Black Ambition is not focused on highly capital-intensive businesses that require significant long-term investment (e.g., biotechnology, pharmaceuticals)

Yes, though the team lead, a 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. 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.

Application Guidance

In addition to thoroughly reading through this FAQ section, the following resources can provide a perspective on what to consider when writing your application :

Techstars Entrepreneur’s Toolkit

Nex Cubed Master Class Recordings

Forbes Business Plan Template for Entrepreneurs

Google for Startups

YCombinator’s Startup Library

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:

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).

Technical Support

E-mail info@blackambitionprize.com and our team will get back to you

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