A few years Previously, Rocío van Nierop visited the Y Combinator technology accelerator. Nierop is the co-founder and chief executive officer of the advocacy group Latinas in Tech. As she passed the building, she flipped through photo after photo of the teams Y Combinator had sponsored. Nierop noticed that they were all white men. “Where are the children?” she asked herself. “Where are the brown people?”
The experience that led Nierop to publish a database of Latina entrepreneurs raised at least $1 million, to for aspiring founders that they already exist. But in the years since, the amount available to Latino founders has barely increased. Data from Crunchbase shows that US startups with Latino founders received just 2.1% of venture capital in 2021. This is up slightly from 1.8% in 2018. The ratio Latino early-stage funding, which may be the most important for underrepresented startups, has fallen slightly since 2018.
Another recent report, from Bain, reviewed the top 500 private equity and venture capital deals in 2020. Less than 1 percent involved a Latino founder. The report also shows that on average investors cut smaller checks on Latino founders, such as Latino founders needing twice as many investors to get their funding level. similar support to startups with white founders.
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“I didn’t think fundraising would be that difficult,” said Carlos Hernandez, founder of Crediverso, a financial education platform for Latinos and Hispanics in the US. When Hernandez started raising his seeds last year, he realized that investors would love his financial literacy and seize the opportunity to meet the needs of millions of consumers. use Latino. Instead, he said, “we met a lot of investors who just couldn’t see the pain points we were dealing with.” Other investors told Hernandez they are more interested in funding fintech in Latin America.
Indeed, funding for startups in Latin America has exploded. Regional startups have attracted more 15 billion dollars last year, catapulting more than a dozen Latin American startups to unicorn status. Founders like Hernandez say that’s great, but similar investment opportunities exist in the US — and venture capitalists don’t seem to be interested in them.
Some VCs have set aside “diversified funds” to raise invest in underrepresented founders. But those programs don’t fundamentally change anything in terms of accessibility or capital flows for Latino founders, said Alejandro Guerrero, a partner at Act One Ventures who is on the advocacy groups VCFamilia and LatinxVC, said. “The proof is in the data,” he said. “There are not enough people investing in these communities.”
Guerrero believes that because the VC transaction process relies on a personal network, many Latino entrepreneurs find it difficult to even have their first meeting. Latin American founders who have raised huge sums of money over the past year often “come from very special backgrounds and are very well educated,” he said. The founder of digital bank Nubank, Latin America’s most valuable private startup, has arrived at Stanford. So are the co-founders of Brazilian real estate startup QuintoAndar, which has raised nearly $800 million. The founder of Kavak, who became Mexico’s first unicorn last year, has an Oxford degree. Hernandez, who eventually raised a $3 million seed round for Crediverso, went to Harvard.
