Latinos are a fast-growing segment of the U.S. population, yet startups run by Latino entrepreneurs struggle with structural obstacles, particularly funding and the ability to scale.
It is the Latino entrepreneur that has the most difficult time to access capital in the United States, according to Sol Trujillo, founder and general partner of L Attitude Ventures and chairman of Trujillo Group. The growing Latino population and attention paid to its entrepreneurs by the venture capital and private equity sector is something that is a clear disconnect between the growing Latino population and the growing Latino population. The Pew Research Center analysis shows that the Latino population has grown 23% over the past decade, outpacing the nation's 7% overall population growth, while the money going to Latino founders has barely increased over the past five years.
In 2021, the data from Crunchbase shows that U.S. startups and companies with Latino founders received around 2% of venture capital funding. A study from management consulting firm Bain Company showed that less than 1% of the top 500 VC and private equity deals involved in Latino-owned businesses in 2020.
Trujillo said that Latino-led businesses are a great source of growth in the United States. They're a great place to make money because they're growing and there's very little capital going there. In an effort to narrow the funding gap, Trujillo's L Attitude Ventures announced last month that it closed its first institutional fund, raising more than $100 million with several financial services heavyweights, including JPMorgan Chase and initial investments from Trujillo Group and Bank of America.
Trujillo said that people are not flowing capital. That means there's either a person problem or maybe there's just a structural problem, meaning they haven't created funds. He said that the goal of the fund is to spark interest among the investing class to address the need for more funding in Latino businesses.
When you're managing a trillion dollars of assets, it's hard to put a hundred million dollars to work because it doesn't move the needle that much, he explained. There are two major changes to the country's demographics and the digitization of everything. The demographics show where the growth is: 70% of the growth in the United States is coming from this cohort. Trujillo believes that the investment community needs to step up to the plate and to help dissolve systemic barriers, despite the fact that some venture capital firms have funded Latino-owned companies.
Trujillo said there was a cohort that is growing faster, within our own borders, within our country with dramatically fewer risks.