But there is some good news on that front: With the aim of narrowing the funding gap, L’Attitude Ventures on Wednesday announced the closing of its first institutional fund—raising more than $100 million with which the self-described purpose-driven venture capital firm plans to invest in early-stage companies and startups run by Latino entrepreneurs.
Several big-name investors were involved, too: Anchor investor JPMorgan Chase was joined by Bank of America, Trujillo Group, Barclays, Cisco, and Royal Bank of Canada, among others.
Sol Trujillo, founder and general partner of L’Attitude Ventures and chairman of Trujillo Group, tells Fast Company that the goal is to spark interest among the investing class in the Latino cohort—a group, which he says, will number 100 million in a couple of decades. “Right now, in our own backyard, we have a cohort of 60 million people,” he says, and they have a strong entrepreneurial streak. “Eighty percent of new net businesses in the U.S. are founded by Latinos,” he says.
“I’m a capitalist, so I believe capital should flow to where the growth is,” Trujillo says. “I’m trying to catalyze [that flow].”
The issue is that, traditionally, there’s been a large disconnect between the growing Latino population in the United States and the attention paid to its entrepreneurs by the VC and private-equity sector. The Latino population has grown 23% overall over the past decade (about 19% of the U.S. population overall), yet, U.S. startups and companies with Latino founders received only around 2% of all VC funding during 2021, according to data from Crunchbase. Further, in 2020, less than 1% of the top 500 VC and private-equity deals involved Latino-owned businesses, per a study from Bain & Company.
As for why the cohort has been all but ignored by VC and PE firms? Trujillo says a primary reason is that capital has been going toward tech startups over the past decade, whereas many Latino-founded businesses are more Main Street-type operations. So, in many cases, they’ve simply been overlooked.
Trujillo also says that he has been approached by Latino entrepreneurs who have told him that, when they tried to pitch some VC and PE firms, were told on the phone that the firms “were not hiring cleaning people,” and hung up.
Meeting entrepreneurs who have faced that type of discrimination, he says, spurred him to found L’Attitude in the first place, with a goal to help those businesses find funding and grow.
And if supporting minority-owned businesses or pushing for more diversity in the startup world isn’t of much concern to investors, perhaps the potential for monster returns is: Data from L’Attitude Ventures shows that roughly $1.5 trillion in economic value could be tapped in the United States if Latino-owned companies saw the same amount of funding growth as non-Latino-owned businesses.
Investing in Latino-owned companies, and making an effort to create jobs, wealth, and a difference on Main Street, Trujillo says, will be a net positive for everyone—not just members of the Latino community.
“We’re not only about providing returns, but also trying to stimulate the economy,” he says. “Every American will benefit from it.”