Latinos are the most prolific creators of new companies in the U.S., with Latino-owned companies already above 5 million, according to figures from a recent report by the Latino Business Action Network (LBAN).
However, even though nearly one in five Latino-owned businesses are in tech, less than two percent of venture capital funds are invested in founders from this demographic. Seeking to address this gap, LBAN announced on Tuesday the launch of a Startup Accelerator.
The program, which is supported by JPMorgan Chase, is comprised of 40 Latino "majority-owned, venture-backed tech companies specializing in areas such as AI, Agtech, health tech, fintech and biotech." The selected companies will undergo a nine-week curriculum that will provide "mentorship, capital matchmaking and courses."
"Founders face many complex challenges on the journey from idea to startup to exit. By supporting this initiative of LBAN and Stanford, we aim to support more equitable access to the critical resources and expertise that can help them overcome obstacles and reach their goals," said John China, Co-Head of Innovation Economy at JPMorgan Chase Commercial Banking. "The companies in this first cohort are bringing fresh ideas to tackle big issues. We look forward to seeing all they accomplish over the next few months, and beyond."
On his end, Arturo Cazares, CEO of the Latino Business Action Network, said that "our mission is to grow the American economy by empowering Latino entrepreneurs nationally."
In an interview with The Latin Times in December, JPMorgan Chase's Global Head of Advancing Hispanics & Latinos, Silvana Montenegro, discussed the focus of the program, saying that "Latinos are the demographic that creates businesses faster than any other, but we tend to stagnate more."
"That's why the program was created for businesses who are willing to scale but may be stuck around the $1 million revenue mark," Montenegro explained.
Different figures released throughout the past months illustrate Latinos' impact in the U.S. economy. A report by Latino Donor Collaborative from last year showed that the GDP generated by the demographic climbed to $3.2 trillion, meaning that if the 64-million strong community were a country it would be the fifth largest economy in the world. Six years before, the figure stood at $1.7 trillion, showcasing the community's rapid growth.
More recently, figure from the Census Bureau analyzed by The Wall Street Journal showed that Latin American immigrants are starting businesses at more than twice the rate of the U.S. population as a whole.
The jump in Latino entrepreneurship levels has driven up the overall share of new businesses owned by immigrants, who accounted for 36% of launches last year compared with 25% in 2019, the report showed. By comparison, new business creation by white and native-born Americans has slowed in the past two years, following a broad surge early in the pandemic.
About half of Latino business owners are immigrants, compared with 7% of non-hispanic white business owners, according to an analysis by the Stanford Latino Entrepreneurship Initiative, which studied businesses with employees and at least $10,000 in revenue.
But despite many stories of success, obstacles are still present.
Forty-two percent of startups with Hispanic owners were denied credit, compared with 25% of startups with white owners, according to data from the 2022 Federal Reserve Small Business Credit Survey.
Hispanic startups also tend to be smaller, the study found, with 46% reporting more than $100,000 in annual revenue compared with 62% of white-owned firms, according to the analysis.
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