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Why more minority founders aren’t backed by venture capital funding

Funding for any new business venture is a critical step that will often determine its ultimate success. Many businesses sink far too early in the process when founders are unable to secure access to capital. Unfortunately, women and minority business owners are more likely to be denied venture capital funding and bank loans compared to white, male founders.  

Why aren’t more minority founders backed by venture capital funding? (Business card photo created by rawpixel.com – www.freepik.com)

According to an article by Forbes, in the past year, only 2.6% of venture dollars went to minorities and 2.2% went to women. In total, that is only $4.2 billion out of the $87.3 billion venture capital was distributed. Additionally, as of January 2021, only 93 Black and 58 Latinx women have ever raised over $1M.

This lack of VC funding for women- and minority-owned businesses is part of an ongoing cycle and diversity issue within the entire venture capital process. The fact of the matter is, diverse venture capitalists (VCs) and limited partners (LPs) will be more likely to invest in diverse founders and entrepreneurs. But so far, these roles have been saturated predominantly by white, male individuals. 

Breaking old patterns 

In an article by Fast Company, Leah Solivan discusses her experiences in securing venture capital funding for her startup and shares ideas on how the old pattern can be broken. In sharing her experience she describes how she first struggled to secure funding because she “didn’t match the pattern.” As a woman and a Latina, these modifiers made her an “other” in the eyes of traditional venture capitalists. She was not the typical founder. 

“VCs had an idea of what successful founders looked like, and they didn’t look like me,” Leah shared in her article. “It took another woman of color hearing my pitch to open up opportunities for me. And that woman, Ann Miura-Ko, was only in a position to say “yes” to me because another VC (Floodgate’s Mike Maples) took a chance on her. As a founder and CEO, I recruited a diverse team of talented individuals who brought different backgrounds and life experiences to the table. Many of these people have gone on to become founders themselves, building their own teams. Others have gone on to become venture capitalists. This is the virtuous cycle of wealth creation in action. And all it took to get it going was one VC deciding to take a chance on someone who didn’t match the pattern.”

This process that she describes is exactly how we can work to break old patterns within the venture capital process. We need diverse LPs who can then fund venture capital funds. And diverse VCs will then seek out and fund diverse founders. These founders can then give opportunities to their diverse team members and employees who can then grow to become their own founders or investors. 

Minority business owners and entrepreneurs, especially Latinos, have great potential to grow and thrive with the right backing. According to the Stanford Research 2020 State of Latino Entrepreneurship Report, Latinos are starting businesses at a faster rate than the national average across several industries, growing 34 percent over the last 10 years compared to just 1 percent for all other small businesses. Additionally, the report showed that over the past two-years, Latino-owned firms grew revenue at an average of 25 percent per year while white-owned businesses grew revenue at 19 percent.

Moreover, much of the growth in the number of new businesses among Latinos has been driven by women. Latinas represent 40% of all Latino business owners and the number of Latina-led employer firms has grown 20% within the last five-year period.

Forbes also reported that in the last year, 40% of new businesses were started by women and 47% of those businesses were started by minority women. 

You might be interested: Dr. Marlene Orozco demystifies misconceptions about Latinas through data 

We need diverse venture capitalists to support diverse founders

“Capital remains in the communities that manage it,” says Ivelisse Rodriguez Simon, Managing Partner of Avante Capital. Earlier this year, Ivelisse spoke as a panelist during Latina in Business’ virtual panel, “Latina Small Business Post-Covid: Recovery Resources and Trends. There she shared trends in investment capital and discussed why many women and minority owned businesses struggle to access capital. 

Ivelisse Rodriguez Simon, Managing Partner of Avante Capital.

There’s about $70 trillion of capital to manage in the United States and only 1% of that capital is managed by women or people of color. So even though women and people of color represent 75% of the US population, we only manage 1% of the capital. And the result of that is that our communities don’t get access to that capital.” 

To break this cycle, we need diverse venture capitalists and limited partners. Ivelisse says that this is an issue Avante has been really committed to. “Not only supporting women and people of color managing businesses but really trying to get women and people of color into this industry to manage capital so that we can go out and find entrepreneurs from our communities and help them grow. Because if there are not many people in my seat that look like us, our people are never gonna get capital,” she says

Don’t miss our Summer Speakers Series and Networking Blast Events throughout August!  Interested in learning how to access business funding for your venture? Sign up for our August 11th workshop, “Resources to Increase Your Business Revenue.” 

While pushing for more diversity throughout the various positions in the venture capital funding process, we also need to hold venture capitalists accountable. It should not only be the job of diverse and minority venture capitalists to fund diverse founders and entrepreneurs. More venture capitalists need to be willing to take risks. After all, is that not the point of “venture” capitalists. 

As Leah Solivan nicely said, “Venture capital was once a business that took big bets on outsiders—it wasn’t long ago that the college drop-out computer nerd cliché was a novel, risky opportunity. As the industry has matured, we’ve defaulted to pattern matching (which too often means young, white males that resemble those once-novel success stories) instead of seeking out founders of different backgrounds, different geographies, different skill sets, and different demographics. Our current cycle tries to play it safe. There’s nothing virtuous about that, and it also runs contrary to the ethos of venture capital—which is about taking a chance on something or someone with the potential for disruption.” 

We need diversity in all stages of the venture capital process. We need to break-down old patterns and biases about what a founder looks like. And we need to hold traditional venture capitalists accountable and push them back to their roots, to take risks on something new, and take a chance on the underdog.

capital access, lban

Don’t miss this Free Resources for Small Businesses Webinar! 

Don’t miss the next session of the Latino Business Action Network (LBAN)  virtual 6-part series supported by Bank of America, “Resources That Matter for Latinx Entrepreneurs During These Times of Uncertainty.” The 6 part series is designed for entrepreneurs and key members of their team and covers important topics such as economic market forecast, capital access, customer acquisition, resource building, and networking. 

capital access

Resources That Matter: Session 3: All about capital Part 2

The next FREE webinar will stream on Thurs, June 24 at 1pm PST / 4pm EST. This upcoming session is a continuation of last month’s conversation on capital access and financial resources. 

Register Now! Session 3: Capital Access Part 2 – June 24th 

What is the impact of not having a banker?

“‘Have a banker before you need a banker’ is one of the best pieces of advice as it relates to capital,” LBAN says. “Capital is a key component in a company’s ability to scale. Unfortunately, not having an established lender is one of the barriers to accessing capital. In addition, we know that Latino-owned businesses are less likely to get their funding needs to be met. The research findings in Ongoing Impact of COVID-19 on Latino-owned Businesses found that 17% of Latino-owned businesses reported that they lacked an established banking provider that prevented them from accessing Round 1 of PPP funding in 2020.” 

This series will help you learn first hand from lenders about how to identify quality bankers and how to continuously engage with them in a way that builds a strong relationship, ensuring the best opportunity for your capital needs. In addition, participants will learn how to structure a one-page funding request, describing their company, their capital needs, and their deployment strategy. 

Don’t miss out on this great opportunity to gain crucial capital insights and knowledge to help your business grow and propel you forward in 2021 and beyond. 

You might be interested: Latina Leaders share small business post-Covid recovery resources 

Grow with Google: Lucy Pinto discusses digital tools, trends, and resources for small businesses 

A report conducted by Grow with Google in partnership with the Connected Commerce Council found that since the pandemic began, 72% of Latino businesses are now using digital tools to reach customers online and keep their businesses open. 

Post-Covid Recovery: Trends in technology and digital tools 

Since the pandemic hit in March of last year, the impact on small businesses has been tremendous. Across the country, small businesses have struggled to stay afloat as restrictions continue to disrupt their business flow. Some of the small businesses that have been hit the hardest are minority-owned small businesses. 

During Latina in Business’ March virtual panel, “Latina Small Business Post-Covid: Recovery Resources and Trends,” panelists discussed how the pandemic has shifted our relationship with technology. Now more than ever, businesses are relying on digital tools to connect with customers, grow, and thrive. Lucy Pinto, who is the Manager of Diversity and Community Training programs for Google joined the conversation, sharing insights and resources on digital tools for small businesses. 

As the Grow with Google Program Manager, Lucy works to level the playing field for communities who face digital divides and barriers to digital resources. She manages the Grow with Google Digital Coaches Program which delivers free digital skills training for U.S. Black & Latino small businesses. 

Lucy Pinto shares digital trends and resources 

Lucy Pinto, Grow with Google Program Manager.

Pilar Avila, Latinas in Business Board Member and Chair of Finances and Governance, moderated the virtual panel. Below are some highlights from her conversation with Lucy Pinto on how small businesses can utilize digital tools, such as the Grow with Google program to help their businesses thrive. 

Pilar Avila  4:09  

So Lucy, access to technology. Digital Access has been, before, during and post pandemic critical for the growth of businesses. However, in many communities, many families, we have seen that the digital divide, and the lack of access to resources…has been accentuated with a pandemic. However, we know that you at Google are addressing exactly those challenges through your program Grow with Google Digital Coaches. Can you tell us about the program and the impact that it’s having as well as any growth trends that you’re identifying through the program, or any other services and programs at Google?

Lucy Pinto  5:45  

Yes, absolutely. Thank you so much for that. And thank you for the opportunity to be here….So Grow with Google is really Google’s initiative to provide digital skills training to Americans across all states. And so, as part of that initiative, one of our main focuses is to really focus on small business communities because we know that small businesses are the backbone of the country. And when you get a little bit more granular, what we do know, as data will show is that the rate at which Black and Latino businesses in the country are growing far extends those of other peers. And so we know that Black and Latino businesses, Latina businesses, as well, are fueling new business growth in the country.

And so in 2017, as part of an effort to help those businesses, those new Latino businesses that are launching and growing, we developed a program called the Grow with Google Digital Coaches Program to specifically cater and reach small businesses that are Black-owned, or Latino-owned. And through the Digital Coaches Program, we provide free digital skills training and coaching to help these small businesses grow and thrive online. And since 2017, we have actually helped train over 60,000 small business owners, where we have digital coaches.

Our coaches deliver workshops in English and Spanish as well, because we know that sometimes they’re you know, in these communities, especially, you have a lot of immigrant communities that come in, you know, they’re starting their businesses, they’re launching, and sometimes they prefer to get information in Spanish. And so we want to make sure that we’re not leaving anybody behind. And we have, we have those workshops in Spanish as well. 

When COVID hit, we really had to pivot our own program plan, because all of these trainings and programs were done in person. And so when COVID hit we pivoted to virtual and that April, I remember last April, we saw such a tremendous interest in learning about these digital tools. So much so that as a Grow with Google team, we ended up partnering with the Connected Commerce Council to lead a report on what are the trends that we’re seeing during COVID? What are our small businesses doing? How are they feeling? How are they thinking? And as part of that report, we actually found some very interesting facts, very specific to Latino small businesses.

You might be interested: Latina Leaders share small business post-Covid recovery resources 

Key findings from the report 

  • Since the pandemic began, a large percentage of Latino small businesses are relying on digital tools as a safety net. 
  • 32% of Latino small businesses have been forced to close because of COVID. That’s 1 in every 3. 
  • 72% of Latino businesses (compared to 60% percent of the general public) adopted Google tools and digital tools to reach customers online, to update their customers, and to expand their reach and stay open.

How to grow your business with Google

Grow with Google Digital Coaches Program delivers free digital skills training for U.S. Black & Latino small businesses. The program has trained over 60,000 businesses on digital tools and works on initiatives that invest in communities that are underrepresented online to untap their potential, help them succeed, and drive bottom line impact. As our world becomes increasingly more digital, these skills and tools will be vital to business growth and success so be sure to take advantage of these free resources. 

Additionally, the Grow with Google Small Business Fund through the Opportunity Finance Network provides financial support to minority-owned and women-owned small businesses. The Fund will allow community development financial institutions (CDFIs) to support both the short-term recovery and long-term financing needs of America’s small businesses by providing low-cost, fixed-rate loans of up to 10-years with an option for interest deferral. 

Since the fund launched it has distributed $90 million in funding to businesses across the US through the local CDFIs and there is still $80 million left to deploy. 

For more information on the fund visit the Opportunity Finance Network.

SweetLove gifts founder on growing a small business during the pandemic

Lourdes “Lulu” Carey is the owner of SweetLove gifts, an online gift shop that personalizes anything you can think of, from wine bottles to balloons and surprise boxes. Her growing business is still new, but Lulu is proud of what she has accomplished so far and the support she has received from her community. 

SweetLove gifts

SweetLove gifts is your one stop shop for personalized items for birthdays, holidays, anniversaries and more!(Photo courtesy Lulu Carey)

Growing a small business during the pandemic: Support is key

Lourdes Lulu Carey,

Lourdes “Lulu” Carey, owner and founder of SweetLove gifts. (Photo courtesy Lulu Carey)

Born and raised in Monterrey, Mexico, Lulu has a Bachelor’s degree in International trade. She moved to New Jersey nearly 10 years ago and resides in Chatham now with her two young boys, Joseph and Austin, and her husband, Joe. A full time mom and Local Consultant for Cultural Care Au Pair, Lulu decided to start her small business, SweetLove, after discovering her creative side this past year. 

“It’s been definitely a challenge to start building a name and a small business during a difficult time for everybody, but I have been blessed to have people around me who support me in all the ways they can,” says Lulu. “My business is still small, but is growing little by little. I couldn’t be prouder of where it’s going.” 

Lulu is still in the early stages of her business, but she has already learned so much and is excited for the future of SweetLove. She is especially glad to have been part of so many special moments for her clients already, like birthdays, graduations, Mother’s and Father’s Day, and other holidays.

“Each and every one of my products are made with so much love. I work hard and do my research to give my customers the best quality. This is just the beginning of a business that I have put all my love and energy into.” 

Lulu is grateful to all those who have supported and helped her on her entrepreneurial journey so far. As every entrepreneur and business owner knows, having a strong support system is so important and invaluable when starting out. Having the support of her husband, friends, family and other local small businesses is what gave Lulu the confidence and push to keep creating early on. 

Lulu personalizes each and every product for any occasion. (Photo courtesy Lulu Carey)

“I have been very lucky and blessed to have support from my friends, community and other local small businesses, helping each other build up our businesses and social media has definitely been great,” says Lulu. 

And remember, helping a business does not always mean you have to buy a product, Lulu says. “You can share their posts, leave a positive comment, tell your friends and family to follow them on social media, etc.” 

Every little bit goes a long way to helping small businesses grow.

 

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Taking risks and lessons learned 

No venture is without challenges and lessons learned. Lulu shares with us a story of her first “mistake” and how she learned from the experience. 

“To me, every order and product I make comes with a story,” says Lulu. “I have been part of many special events and I treasure each and every one. There are always good and not so good stories. I remember when I first started, I had to do a delivery. The client ordered a personalized wine bottle for her best friend. Once I got to where I was delivering my order, I accidentally dropped the wine, right there in front of the client.” 

SweetLove gifts (Photo courtesy Lulu Carey)

In that moment, Lulu went through so many emotions, some she can’t even explain. She felt embarrassed and disappointed with herself. It was a simple accident, but still she couldn’t help but feel bad. Seeing the product that she spent so much time, love, and care working on to make it special for her client shattered on the floor was really upsetting. 

Still, this moment was an important learning experience for Lulu.

“I look back now and see how this moment helped me. I learned from this experience to never let a bad moment take me down, to keep giving my best, and to never stop because success will come and you have to be prepared to deal with many hard situations.” 

Many aspiring entrepreneurs may stop themselves from starting their business because they fear failure or think their ideas will not be successful. Others may make themselves dizzy with questions: Will it work? Will I get back the support I always give to small businesses? How much money will I lose? 

You might be interested: How these personalized Spanish children’s books are helping to raise bilingual children

Lulu knows first hand; she asked herself the same questions and more. Yet, even though there was a lot of uncertainty, those questions and worries did not stop her.

“I’m glad to have been part of many special moments, like birthdays, graduations, Mother and Father’s Day. Each and one of my products are made with so much love.” (Photo courtesy Lulu Carey)

“I was proud and excited to put my heart and soul into this,” she says. “And so, to all of you thinking about taking the risk and starting a new business I will say this: DO IT. All of those dreams, ideas, projects and plans that have been in your head for some time, just do it. It won’t be easy, but what is? And if somebody else is doing what you are thinking of doing, don’t worry. Like we say in Mexico, ‘el sol sale para todos.’

Support will come, in all shapes and forms and from people and places you didn’t imagine. Don’t let anything stop you, and get to work on your dreams!”

pacifier clips

Shop handcrafted, custom pacifier clips for your “Little Amour”

If you’re a mom, you know how babies can be with their pacifiers. They are completely attached to them–until suddenly the pacifier mysteriously disappears right when they want or need it most. Sometimes it can feel like a full time job just keeping track of every time your baby drops their pacifier. If you’re tired of chasing your baby’s pacifier, investing in pacifier clips will be a lifesaver. Pacifier clips can be added to any pacifier and clip on to your baby’s clothing, so when they inevitably spit it out, it won’t go flying off into the unknown. 

pacifier clips

“Little Amour” custom, handmade pacifier clips (Photo courtesy Christina Ochoa)

“Little Amour” is a Latina owned Instagram shop that specializes in making adorable, handcrafted and custom pacifier clips for your baby. 

“Little Amour” is born

Christina Ochoa. owner and founder of Little Amour (Photo courtesy Christina Ochoa)

“Little Amour” began as a hobby for 23 year old Christina Ochoa. Born and raised in California, Christina graduated from California State University Stanislaus with a Bachelor’s in Business Administration with a concentration in General Business. She began making her pacifier clips in her spare time as gifts for family and friends that were moms or soon-to-be moms. It was a simple, relaxing hobby and a great way to unwind and ease her mind after a long day. 

However, soon her friends and family started encouraging Christina to open her own shop to sell her handmade pacifier clips because they loved them so much. On June 26 of this year, Christina decided to finally give in and go for it! She created her Instagram business account that very day and “Little Amour” was born. 

“I decided to name my small Instagram shop “Little Amour” because I have always had a profound love for children and I like referring to them as my “little loves.” Therefore, I wanted my shop to have a Latin touch since it is Latina owned so that’s how “Amour” came upon,” says Christina. 

Growing a small business during COVID-19

Since July, Christina has been launching new pacifier clips daily. As a small online business launched during the COVID-19 pandemic, one of the biggest obstacles for Christina has been growing her following on Instagram and boosting her sales. 

“I have been patient though and I’m confident that my small business will grow and be successful,” she says. “I also know that this can be normal since I recently opened up my shop and that it takes a lot of time, hard-work, and dedication to keep a business running.” 

BPA-free and made with hewable silicone beads to soothe babies’ sore teething gums (Photo courtesy Christina Ochoa)

Christina is diligent and dedicated to growing her business and overcoming these challenges. You can find her on Instagram, posting daily or in Facebook groups dedicated to supporting local handmade small businesses. These efforts have helped her reach more people and grow her client base. 

You might be interested: 3 Marketing challenges Latina-owned businesses face

“Hecho con amour”: custom, handmade pacifier clips

“I like to live by the quote ‘Do what you love, and you’ll never work another day in your life’ because that’s exactly what I aspired to do and now I’m doing it,” says Christina. “Handmaking pacifier clips feels like a hobby and not a job because that’s what I love to do. I put my heart and soul into each clip making sure that it is made to perfection for customer satisfaction.” 

pacifier clips

Stylish and cute, each pacifier clip is fully customizable (Photo courtesy Christina Ochoa)

Each one of Christina’s handmade pacifier clips is “hecho con amor” and BPA Free and 100% safe for babies. The stylish and natural pacifier clips are made with chewable silicone beads to soothe babies’ sore teething gums.

pacifier clips

And of course, every one is “hecho con amor” (Photo courtesy Christina Ochoa)

 

“I am so eager to achieve success because making pacifier clips is something that I have grown to love and very passionate about. I also like seeing the creativity that each customer has when they request a custom clip,” Christina says.

“Little Amour” pacifier clips are baby approved! (Photo courtesy Christina Ochoa)

Most importantly, she loves receiving pictures of the babies wearing her pacifier clips.  “It brings me so much joy and that’s what motivates me to keep going,” she says.

Shop these adorable handmade pacifier clips at “Little Amour” on Instagram now and never lose your baby’s pacifier again!