By Ramona Ortega
As we celebrate Hispanic Heritage month across the nation, it is a good time to highlight the cultural and economic contributions of the largest and fastest-growing millennial population in the country.
In 2016, 61% of Latinos in the U.S. were 35 or younger – with a median age of 28 – they are the nation’s youngest major racial or ethnic group. With more than half of millennials saying they want to start their own business, it is clear that Hispanic entrepreneurship is here to stay.
More importantly for digital and tech entrepreneurs. According to a recent Nielsen report the Latinx market is over-indexed by 9% for smartphones and 35% agree they are first adopters of new tech products. As a young demographic, these millennials grew up in the internet age are eager to participate in the innovation economy.
No matter where you land on the immigration debate, the American dream is being fulfilled by Latino entrepreneurs
Mark L. Madrid, CEO of the Latino Business Action Network (LBAN) is on a mission to double the number of $10+ million, $100+ million, and $1+ billion U.S. Latino-owned businesses by 2025 through the SSLEI’s six-week program for high-potential Latino businesses and there is no reason to believe he won’t be able to achieve it.
Latino-owned companies have grown 31.6 percent since 2012, more than double the growth rate of all businesses across America (13.8 percent).
A 2017 study by the Stanford Latino Entrepreneurship Initiative found that despite the barriers, including inadequate access to capital, “Latinos have been starting a million net new businesses every five years.”
There are nearly 1.5 million Latina-led businesses in the U.S., representing 87% growth over the past five years, and the young women founding these businesses are an incredible force as bicultural influencers. The Aspen Latino Roundtable found that Latinas are attending college at higher rates than ever and are increasingly becoming politically active. “Simply put, Latinas are becoming a powerful force in the United States and have the potential to make greater impact with more equitable access to social and economic mobility.” Latinas, as household decisions makers, control over $1.5 trillion per year, making them highly lucrative demographic for brands. By 2020, Hispanics will account for over half of the population growth in the United States, and their spending power will also increase significantly” noted Susan Viamari, vice president of Thought Leadership for IRI.
Untapped and underestimated entrepreneurs
According to the Biz2Credit’s Annual Study, the average annual revenue of Latino-owned business jumped an impressive 26.5% during the past 12 months, to $327,189. Despite these gains, Latino-owned businesses continue to remain small in comparison to the average. Of all Latino businesses, 98% reported less than $1 million in annual revenue. This gap is not only bad for Latino businesses but represents billions in lost wages and community reinvestment. If Latino-owned businesses had the opportunity to grow as quickly as the U.S. average, they could add $1.4 trillion to the U.S. economy.
A Bank of America report found that Latino entrepreneurs are more likely to apply for a business loan but less likely to receive one from traditional banks. Camino Financial, a lending platform based in Los Angeles, is taking advantage of that opportunity by providing loans up to $400,000 to Latino small businesses. There is a significant amount of upside to capture and Camino Financial is ready to tap into it with a recent announcement of expansion into all 50 states. “Our goal is to scale our lending and services to 50,000 small businesses in the next 5 years.”
Latino resilience and opportunity for financial services
The barrier to entry for new entrepreneurs is the lowest it’s ever been, and Latinos are taking advantage of that—but access to culturally relevant financial tools and services continues to be scarce. Historically, the Latino community has had plenty of reasons to not trust big banks, with scandals like the one at Wells Fargo, but times are changing and so are financial services.
Fintech companies with an eye to the future are taking notice of the opportunity to do things differently. Azlo, a no-fee, no-minimum digital small business banking platform is betting on the new generation of founders by reaching out to this new demographic with easy bilingual onboarding, eligibility for a growing number of visa holders, and resources to help new entrepreneurs start and scale their businesses.
Mission-driven companies like my own My Money My Future; which help multicultural millennials manage their money through a personal finance platform are finding new ways to combine technology and content to attract and engage users with an authentic voice.
Latinos have come to embody the resilience and grit that characterize successful entrepreneurs, and the institutions and organizations that support these entrepreneurial dreamers will benefit from capturing the long-tail of opportunity as consumers look for companies with a mission.
Ramona Ortega, CEO & Founder of My Money My Future and Entrepreneur In Residence, Azlo. She is also an Angel investor ane expert in equity crowdfunding. She is a contributor to TechCrunch and Huffington Post on issues of law, tech and diversity and is an advisor with Latino Startup Alliance and Black & Brown Founder. Ortega has been featured in Forbes, CNN, TechCrunch, American Banker, NPR, Latina Magazine, Cosmopolitan Magazine and La Opinion.