As a young person, I experienced firsthand the growing pains of sustaining a small business that predominantly served members of my community in South Los Angeles and failed to grow beyond the local market. In my neighborhood and across the country, Latinx businesses are more than providers of goods and services; they are oases for cultural and community outreach. This experience made me aware of how many entrepreneurs with similar backgrounds lacked the financial and social capital to begin, sustain, and scale their businesses beyond our communities.
As I consider this, I recall too my experience when I studied business in college. In college, when people talk about investments, economic mobility is rarely part of the discussion. Instead, my peers and I would discuss startups, investment portfolios, diversification strategies, and unlocking wealth within the companies where we might place investments. My experience running a local business had seemingly little to do with what I learned in these college “business” classes.
Yet we know investment is critical to business success. To scale a business, then and now, requires access to capital and a network you can tap into for resources, guidance, and connections. For example, during the pandemic and shelter-in-place ordinances, 86 percent of Latinx business owners reported that COVID-19 negatively affected their businesses. Latinx-owned businesses also experienced higher barriers to access to Paycheck Protection Program (PPP) funding. A Stanford survey found that in 2020, Latinx-owned businesses faced much greater barriers to getting PPP funding than white-owned businesses. Moreover, between 2015 and August 2020, only 2.4 percent of total venture capital funding went to Black and Latinx founders.
