Latino Entrepreneurs’ Stymied Attempts to Snag VC Funding
By: James Flippin · March 27, 2023 · Reading Time: 3 minutes
Venture capital financing often serves as a lifeblood to entrepreneurs, as the funds provided can make it possible to turn an idea into a full-fledged business. But for many, venture capital can seem like an exclusive club catering primarily to white men. Latinx VC’s State of Latino/a Second Annual Report evaluates the state of the industry from the perspective of the Latino community.
For years, venture capitalism has been led by white men and often the funding has gone to a similar group of people. Meanwhile, many Latinos find it difficult to even have their pitches heard, let alone acquire the desired funding.
Historically, the rate at which Latinos start businesses has exceeded that of other groups. Latinas in particular have an entrepreneurial bent. Even so, few Latinas are in executive positions at VC firms. One study estimated that as of 2020 there were only 10 Latinas in such roles. And the pipeline of Latino talent moving up the ranks is rather empty, representing only 2% of non-partners according to Latinx VC.
Some of the funding Latinos secured resulted from diversity programs at banks and other companies. In the current uncertain economic environment, there is new concern that this funding may vanish amid corporate belt-tightening.
Many Latinos contend their unique perspective into their community offers profit potential that venture capitalists are currently missing out on. Failure to fund their initiatives also has societal implications as investment in the Latino businesses can benefit the community as a whole via jobs and networking opportunities.
For this reason, advocates such as Latinx VC will continue to bring visibility to the issue and endeavor to secure the ongoing support of companies. In time, the venture capital world may well see the benefit of a more inclusive approach.
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