The U.S. Latino entrepreneurial community is strong and growing. From 2007 – 2019, the number of Latino-owned businesses increased by 34% while the number of White-owned businesses fell by 7%.
While Latinos are starting small businesses at a faster rate than any other group, there is still a noticeable gap in the number of startups founded by Latinx entrepreneurs.
Small businesses and startups follow opposing business models. Small businesses grow slowly and organically while startups often utilize technology and investment to grow rapidly.
Building a successful startup is not easy. 9 out of 10 startups fail. Nailing product market fit, and then raising capital, can be a challenge– especially as a minority. According to LatinxVC, only 1% of venture funding goes to Latino entrepreneurs. But indicators show that percentage is set to rise.
Three reasons why:
1. For Latinos, by Latinos
The U.S. Latino population is growing. According to PEW Research Center, Hispanics now make up approximately 19% of the population (that’s 62.5 million Hispanics, representing diverse nationalities.) As someone who grew up as a first-generation American with two immigrant parents, I buy from brands who “get me.” Who know what it is like to be bilingual, live between cultures and have relatives in Central America. I am not alone. 82% of shoppers prefer brands that align with their own values, which is why we need more startups founded by Latinos for Latinos.
One example of a Latino brand that truly “got” its market is Regalii, a tech startup that enabled remote payment of bills for family and friends in other countries. Dominican-born entrepreneur Edrizio De La Cruz moved to New York City in the 1990s. Like many U.S. Latinos, Edrizio’s family sent money back to his mother in their home country. In 2013, Edrizio founded Regalii and secured $6 million in venture capital. A few years later, he exited this startup when he sold Regalii to Mastercard.
2. New Resources for Hispanic Startups
Recently, the number of national investment groups and organizations focused on Hispanic entrepreneurs has increased significantly. The Google for Startups Latino Fund helps Latino-led startups in the United States secure funding and receive ongoing Google mentorship and product support. Another, Techqueria, provides Latino and Latina professionals with the resources and support they need to excel in the tech industry. A purpose-led venture fund, Latitude, invests exclusively in early-stage US Businesses led and owned by Latinos with significant growth potential achievable through technology.
In New Orleans, The Idea Village offers an IDEAfuel venture accelerator that supports startups founded by Black, Indigenous and other People of Color (BIPOC) with non-dilutive capital, one to one mentorship and exclusive business resources.
Even more can be found here.
3. Startups Create Wealth
According to the Brookings Institute, many Hispanic households have less wealth and income than white households, with the average white family having five times the wealth of the average Hispanic family.
Latino-founded startups can change that. The goal for many founders is to build a startup as fast as possible (think 3-6 years), and then to sell the company for thousands, millions, or even billions. As you know, when a startup gets bought out or acquired, the money goes straight to the founders and stakeholders. The result is an influx of money that can create wealth across generations for a Hispanic family.
The opportunity to build startups by Latinos for Latinos is vast. Hispanic entrepreneurs are in a unique position to meet the needs of the growing U.S. Latino population, utilize resources established specifically for them and possibly create generational wealth faster than a small business ever could.
About The Author: Valeria Ali is the Strategic Marketing Associate at The Idea Village in New Orleans
Author’s note: Terms “Hispanic” “Latino” or “Latinx” are used interchangeably for this population in this written piece.