Small Latino-Owned Startups Often Face Struggles

By Nicole Akoukou Thompson

Startups are newly created companies functioning in the early stages of their development. They tend to tap the market, to discern whether their product or service will be beneficial to the public and, most importantly, lucrative. Startup companies tend to be web-based, or they sell technology; and 100 percent of small startups’ value is based on its intellectual property. Research was recently done to investigate whether there were startups launching scalable businesses aimed to service the Hispanic community/ consumers, and surprisingly, there aren’t very many.

When mentioning “Latino startups,” this means two things: startups that service the Latino market and startups that are operated by Latinos; also, small companies with high growth potential and small companies. Only a handful of companies are both Latino-owned and Latino-focused, such as Consorte Media and Progreso Fianaciero, for unspecified reasons. There are also companies that are Latino-owned but non-Latino-focused businesses, such as Contour, BrokersWeb and Contigo Finance; and Latino-focused and non-Latino-owned businesses, such as Metro PCS, Xoom and QuePasa.

The need to specify the differences is to acknowledge the different challenges that each businessfaces, to understand what skills are needed, what kind of employees are required, and to uncover potential sources for capital. The tribulations associated with being a founder of a Latino owned or focused business includes strenuous hours and slow-grossing income, which can be particularly difficult for Latinos who are initiating startups with little-to-no capital.

There is racial bias when searching for funders, and there is a lack of high-risk capital. Beyond that, it is difficult to networkwith venture capital investors who rarely seek out-of-network ideas, who also work solely with vetted startups. Latino founders differ from those with wealthy backgrounds, who can easily flood ideas with funds to keep them afloat. Most Latinos have to shoulder their growing business without very much money, and with little financial assistance from family.

Even Latino-geared (non-Latino-owned) startups face difficulty when it comes to finding investors who generally look to throw their money behind ideas that they already know to be lucrative, afraid to branch into the unknown. These startup companies also have to cater to their bilingual their bilingual consumer base, making sure that content and customer support is accessible in both languages, which can be difficult.

Mark Clayton Hand, the co-founder of a student-run startup fund at the University of Oxford recently wrote a short article series forVista Hispano on startups and the Latino market. He and his fellows conducted months of research to discover what the present state of the Latino startup is, and he concluded that though the market is large, nuanced and tough, “both Latino founders and those interested in the Hispanic market are plowing ahead. One example of such forward momentum is Manos Accelerator, which has recently accepted their first cohort of Latino startups.”

So, while things are difficulties for Latinos and those interested servicing Latinos, there are some startups that prevailing in spite of adversity.

Originally published at Latin Post.