Listen to this articleHispanic Heritage Month is underway.
No doubt, you’ve seen many tributes to the music, food and traditions of Latino cultures. Maybe you heard about a Hispanic festival or a new, upscale taqueria.
But what you likely did not hear about is the unprecedented momentum of Hispanic startup businesses and why now is a good time to invest in them.
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%.
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 Black or Brown person. According to LatinxVC, only 1% of venture funding currently 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 am drawn to 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 investment in 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, Techeria, provides Latino and Latina professionals with the resources and support they need to excel in the tech industry. A purpose-led venture fund, L’ATTITUDE Ventures, invests exclusively in early-stage US Businesses led and owned by Latinos with significant growth potential achievable through technology. Even more can be found here: 7 VCs and Organizations Helping Latino Entrepreneurs – Hispanic Executive.
Locally, The Idea Village offers the 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. El Centro, also in New Orleans, is exclusively for Spanish speaking entrepreneurs.
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.
Increased investment in 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. When a startup gets bought out or acquired, the money goes straight to the founders, investors and other stakeholders. The result is an influx of money that can create wealth across generations for a Hispanic family.
Smart money should take a long, hard look at Latino startup founders who are creating businesses for fellow Latinos. Hispanic entrepreneurs are in a unique position to meet the needs of the growing U.S. Latino population, utilize resources established specifically for Latino startups and possibly create generational wealth among a demographic whose time has come.
