I think we can do in one generation the kind of wealth creation for Latinx people that could take two to three generations.
This is just one of many insights shared during a panel we co-hosted in celebration of Latinx Heritage Month. We invited Danny Navarro of Google for Startups to moderate a discussion with Tiq Chapa of Ulu Ventures, Ashley Aydin of VamosVentures, and Angela Guzman, founder of Tjiko, about the fast-growing opportunity to invest in Latinx founders and changes in the industry they're most excited about.
Even with 1 in 5 people in the U.S. identifying as Hispanic, only 3% of funders and 2% of founders are Latinx respectively, resulting in under 1% of investor and PE dollars. This underinvestment blocks one of the fastest-growing segments of the U.S. economy — and therefore, an opportunity for leaders like Tiq Chapa, whom Danny introduced as "the professor of the Latinx startup ecosystem in the U.S."
Tiq has been a sought-after resource for research and insights about Latinx founders and consumers over the past decade through his work with the Stanford Latino Entrepreneurship Initiative. Noting the median age of the U.S. Latinx community is ~30, Tiq pointed out they have ~$1.5 trillion in purchasing power. This characteristic is unique to the Latinx community, and Tiq advised the audience to move with greater urgency to invest in this generation's talent.
Danny also mentioned that U.S.-based Latinx-led companies are best positioned to scale in Latin America because their infrastructure and technology are informed by culture. Angela Guzman's success with her company Tjiko is one example. Angela led design at Google and Airbnb; she also designed Apple's first 500 emojis. The experience that comes with collaborating with executives at these companies along with her personal story as a Latina are qualities that cannot be easily replicated. But when true representation is absent, these sorts of founder qualities can be overlooked.
Tiq described other overlooked strengths investors should consider when evaluating Latinx talent, especially founders. Graduating from a flagship engineering university from Latin America or a U.S. community college can demonstrate "distance traveled." Tiq also shared that Latinx people in the U.S. have just 10% of every U.S. dollar in median household wealth. Within venture capital, this gap translates to the difference in the experience of founders who can easily access a "friends and family" round — which can afford them 12-24 months runway for building and scaling a startup. Many Latinx founders build companies with traction without a "friends and family" round at all, instead bootstrapping their companies with remarkable resilience.
Recognized among rising Latinx and Black investors in VC, Ashley Aydin understands this unique difference. She has evolved the investing process at VamosVentures to win deals with founders often overlooked and undervalued by others, including Suma Wealth, Innovare, and SweetBio. She emphasized that the breadth of industry coverage by Latinx founders is often overlooked, and noted that the rising generation of Latinx founders are looking for funders who have mission alignment. These founders will also keep funders accountable to their impact metrics. For Ashley, this can include investing for feedback on pitches or introductions — something larger institutions often don't make time for with individuals outside their familiar networks.
In general, the group shared a sense that there's nowhere but up to go from here. They are committed to creating new pathways for Latinx funders and founders, and hope to see seasoned leaders do more peer monitoring with rising talent, and earlier co-investing with emerging Latinx investors.