The U.S. Latino entrepreneurial community is strong and rapidly growing.
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.
Startups and small businesses look similar in the early stages, but as the founder(s) grows the company past the ideation stage they have significantly different paths towards growth. Small businesses typically grow slowly and organically and are focused on serving a small or local customer base; on the other hand, the goal of a startup founder is to sell their innovative product/service to larger markets and often utilize technology, investment money, and teams to rapidly grow and hopefully exit their company. (The term “exit” is startup lingo that simply means when a company is acquired, often for BIG money– which is a total win for the founder… did someone say generational wealth?!).
For example, consider someone with an idea for selling a skincare product: if the entrepreneur's goal is to establish a local brick-and-mortar store and cater primarily to the local community, the small business model is the best choice. However, if the same entrepreneur aspires to have their product stocked and sold in retail stores nationwide and/or internationally, then a startup business model becomes the better option.
Here’s another example of a startup model: CNN Business reported on Edrizio De La Cruz, Dominican-born founder who moved to New York City in the ‘90s. Like many U.S. Latinos, Edrizio recalled fondly that his father sent money back to his mother in his home country. In 2013, during his graduate program tenure, he founded Regalii, a tech startup that helps people remotely pay bills of family and friends in other countries. He went on to secure $6 million in venture capital. Ten years later, he “exited” Regalii when he sold his company to Mastercard.
Building a successful startup is no easy feat, according to data 9 out of 10 startups fail. And raising capital can be challenging. Only 1% of venture funding goes to Latino entrepreneurs, according to a report done by LatinxVC. However, as Latinos, we are instilled (personally, I think from birth) with an entrepreneurial-minded spirit that is essential for becoming a startup founder. Building a startup takes “Ganas!” – and I know you have that.
If you have ever had a business idea or desired to be an entrepreneur, but never considered the option to turn that idea into a high-growth startup, now is the time. Here are a few reasons why:
- Massive Opportunity in the Latino Market
This goes without saying, but the U.S.’s demographic landscape is not what it used to be ten years ago. According to PEW Research Center, Hispanics now make up approximately 19% of the population (that’s 62.5 million Hispanics, representing diverse nationalities), with no sign of slowing down. A recent study by Axios New Orleans reported that the number of Hispanic residents in the city of New Orleans alone grew 102.6% (between 2000 and 2022) to more than 120,000 people, and that’s not to mention Jefferson Parish's growing Latino community. This is a strong signal that there is a market of people that have challenges and needs that can be solved through your business ideas. Which leads me to the next point:
- By Latinos for Latinos
If you were anything like me – growing up with two immigrant parents, being a first-generation American, bilingual, living between cultures, and having family in the Americas – then you know that our U.S. Hispanic community has needs and challenges that are still unmet. To this day, I struggle to identify with brands that align with my values, speak to my needs, and truly address my challenges as a Latina. We need more startups founded by Latinos for Latinos because we can best identify what our needs are, and we are more likely to have the solutions for them!
- New Resources for Hispanic Startups
Over the last few years, the number of national investment groups and organizations focused on Hispanic entrepreneurs has increased. Examples include The Google for Startups Latino Fund which helps Latino-led startups in the United States secure funding and receive ongoing Google mentorship and product support. Techeria provides Latino and Latina professionals with the resources and support they need to excel in the tech industry. L'Attitude Ventures is a purpose led venture fund that invests exclusively in early-stage US Businesses helmed 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.
- Startups Create Wealth
“Success for a startup approximately equals getting bought,” shared Paul Graham, co-founder of the influential startup accelerator and seed capital firm Y Combinator. When you are building a startup, the goal for many founders is to build something as fast as possible (think 3-6 years), and then to sell the company for thousands, millions, or a billion plus in return. And yep, just to call it out, when your startup gets bought out or “acquired” (more startup lingo), the money goes straight to you, your investors, and your stakeholders.
The opportunity to build startups by Latinos for Latinos is vast. By thinking “startup” for your business idea, you could potentially help address the challenges and needs of the growing U.S. Latino community, make a greater impact on society and possibly create generational wealth faster than a small business ever could. There are plenty of startup support resources out there: if you are in school, check out if there are entrepreneurship or innovation departments that you can get involved in! If you are in the Gulf South area, The Idea Village (where I work!) is a non-profit that supports startup founders at every stage, and El Centro is a great organization that focuses specifically on supporting Spanish speaking entrepreneurs. Now that we're done talking business here, let's celebrate Hispanic Heritage Month 2023 the best way we know how: con mucho comunidad, comida, y fiesta!
The terms “Hispanic” “Latino” or “Latinx” are used interchangeably for this population in this written piece.