2024 State of Latino Entrepreneurship (SOLE) Summit

9th Annual State of Latino Entrepreneurship Summit

• The 9th Annual State of Latino Entrepreneurship Summit aims to empower Latino entrepreneurship and build a strong ecosystem for Latino entrepreneurs.
• Stanford Latinos created the Latino Business Action Network (LBAN) to partner with Stanford University and make an impact on the Latino community through entrepreneurship.
• LBAN focuses on research, business scaling programs, and building an ecosystem around Latino entrepreneurship.
• The summit brings together Latino entrepreneurs, bankers, VCs, mentors, supporters, and alumni to foster connections and support Latino entrepreneurship.
• LBAN has had 16 cohorts of the business scaling program and is now recruiting for the 17th and 18th cohorts.
• There are over 1,100 alumni of the program across the country, with 250 in attendance at the summit.
• LBAN is creating networks of networks by partnering with various organizations, corporations, and ecosystem-building institutions.
• The goal is to build a strong ecosystem that supports Latino entrepreneurs and addresses the challenges they face, such as unfairness and systemic issues.
• By empowering Latino entrepreneurs and building a supportive ecosystem, LBAN aims to lift the Latino community and contribute to the betterment of America.

Latino Entrepreneurship Research and Initiatives

• Stanford University is committed to enhancing the success of Latinos through educational initiatives, research, and community outreach programs.
• Stanford GSB Professor Elban Co-Faulty Director George Foster discusses the research and dialogue between Stanford GSB and the Latino Business Action Network (LBAN).
• The partnership between Stanford GSB and LBAN is mutually beneficial, with the GSB faculty contributing research and teaching materials, and LBAN providing feedback and insights from Latino entrepreneurs.
• The latest LBAN survey, conducted with Qualtrics, included over 10,000 business owners, with a focus on Latino-owned businesses and technology-centric companies.
• Latino-owned businesses continue to outpace White-owned businesses in terms of revenue growth, with a significant gap of 88.7% to 5.6%.
• Latino-owned businesses have adopted AI technologies faster than their White-owned counterparts, although the specific definition of AI technologies was left to the participants.

Key Findings from the 2023 State of Latino Entrepreneurship Survey

• Latina entrepreneurs have a strong presence in business ownership but face the lowest loan approval rates from banks.
• Tech-centric businesses owned by Latinos experience impressive revenue growth but encounter challenges such as limited cash flow and the impact of the 2023 banking crisis.
• Latino immigrant entrepreneurs dominate in business ownership but have smaller businesses with slower growth compared to their US-born counterparts.
• Latina entrepreneurs seek financing at a higher rate than other groups but encounter significant hurdles, receiving the lowest loan approval rates from both local and national banks.
• Tech-centric Latino-owned businesses achieve the highest revenue growth rates but face challenges that limit their scalability, including limited liquidity and financing difficulties during the banking crisis.
• Latino-owned tech-centric businesses face significant financial vulnerabilities, with over 40% having less than one month of cash reserves and only 9% having enough cash to cover expenses for seven months or more.
• Latino-owned tech-centric firms were disproportionately impacted by the banking crisis of March 2023, with 36% reporting difficulties securing loans or lines of credit compared to 23% of white-owned tech-centric firms.
• Latino immigrant entrepreneurs dominate in terms of ownership of employer businesses, despite having lower median revenues and slower revenue growth rates than US-born Latinos.
• Latino immigrant-owned businesses have faster revenue growth rates than white-owned businesses, with a median growth rate of 8.4% compared to 5.6% for white-owned businesses.
• Latina-owned businesses are at the forefront of business creation and are the most active group seeking financing, but they face the lowest loan approval rates from local and national banks.
• Latino-owned tech-centric businesses have the fastest revenue growth of any industry across all employer businesses in the US, despite facing severe vulnerabilities in liquidity and financing opportunities.
• Latina business owners are growing and starting businesses faster than any other segment and are also growing revenues faster than any other segment.

Challenges and Success Stories of Latino Entrepreneurs

• Carla's company, Border Apparel, has been in business for almost 40 years and has survived economic catastrophes, recessions, and the COVID pandemic. They are celebrating their ability to maintain and expand their company, diversify, evolve, and grow.
• Supply Change Capital, founded in late 2020, has closed its fund at target and is raising its next one. They have a strong platform, a solid portfolio of investments, and are celebrating their first AI patent, which is set to be approved in April and has already been cited by SAP and McKenzie.
• The research dove into Latinas is important because it provides a focus and lens to understand the journey of Latina businesses and contribute to a better and healthier landscape for Latinas.
• Border Apparel is a binational advantage company with factories in Mexico and the United States, offering clients the ability to position products in different price points for different markets. They compete with adapting to trends quickly, offering shorter lead times, and providing speed to market.
• The number of Latina general partners (GPs) in venture capital is still very small, with an estimated less than 40 out of 170 billion dollars in deals made in 2023.
• Latinas belong as check writers and venture capitalists because they bring diverse perspectives and consider long-term outlooks, data, and multifaceted inputs.
• Sophia's company, a venture capital firm, has been successful in accessing alternative forms of capital due to the lack of traditional funding available to Latinas.
• The speaker discusses the challenges faced by founders in the venture capital ecosystem, particularly the constantly shifting criteria for success.
• She emphasizes the importance of finding creative ways to secure funding, such as through grants and competitions, and the need for founders to be resilient and persistent in the face of setbacks.
• The speaker also addresses the challenges faced by women in male-dominated industries, particularly in Latin American cultures, and highlights the importance of self-belief, hard work, and mentorship in overcoming these obstacles.
• She shares her experience as a woman in the manufacturing industry in Mexico and the strategies she employed to prove her worth and expand her business.
• The speaker then discusses the diversity mandate in venture capital and how her firm, Norwest, has achieved a diverse portfolio without an explicit mandate.
• She emphasizes the importance of being approachable, accessible, and visible in the ecosystem, and of recognizing talent from all backgrounds.
• The speaker concludes by acknowledging the importance of unconscious bias in the evaluation of founders and the need for a level playing field to ensure that diverse founders have equal access to capital.

Challenges Faced by Minority-Owned Businesses

• Supplier Diversity is broken and needs to be fixed.
• Supplier Diversity programs are stuck in procurement and not empowered.
• Buyers need to have greater access to minority-owned businesses.
• Repositioning DEI commitments can be dangerous and set a new precedence.
• Minority-owned businesses are facing challenges due to the current economic climate.
• Latina entrepreneurs are resilient and hardworking.

Jose Feliciano's Journey in Private Equity

• Jose Feliciano, co-founder of Clear Lake Capital Group, started his own private equity firm after having a successful career in finance.
• Feliciano and his partners believed they could invest differently by combining sector expertise with the ability to invest across an economic and credit cycle.
• They faced skepticism but persisted and have since grown Clear Lake Capital into one of the most successful private equity businesses in the country.
• The speaker, Jose Feliciano, discusses the challenges he faced when raising capital for his private equity fund during the financial crisis of 2008.
• Despite the difficulties, he persevered and was able to secure some funding, which he invested during a time when the market was at a low point.
• This decision proved to be successful, and Clear Lake Capital survived the crisis.
• Feliciano believes that his experience as an entrepreneur and investor, including his failures, helped him navigate the crisis.
• He also emphasizes the importance of performance in the private equity industry and the responsibility that successful investors have to serve as role models for others, particularly those from underrepresented backgrounds.

Advice for Underrepresented Entrepreneurs

• Underrepresented minorities often face self-imposed limitations and imposter syndrome, hindering their success.
• Successful entrepreneurs can serve as powerful role models for underrepresented communities.
• When investing, it's important to understand the sector and company well, and identify unique angles or differentiation points that can lead to successful investments.
• Underrepresented minority and women-led funds often face a lack of capital despite comparable or better returns, presenting an opportunity for investment.
• Entrepreneurs seeking investment should consider overcoming reluctance to take on debt or bring in outside equity partners.
• Building a business with ownership of intellectual property and assets that generate long-term rents is valuable.
• Communicating and packaging business ideas in a familiar and easily understandable way is crucial for attracting investors.