As Investors scour for new themes and ideas, a group of funds have looked to indicators such as population growth and disposable income to generate deals. From this analysis, these funds have focused on the Hispanic demographic and Hispanic Owned companies that target tremendous growth and wealth that the Hispanic demographic will have in the coming years.
Statistics: US. Census Bureau predicts the Hispanic population with rised to about 59 Million by 2025. Most important will be the disposable income which is approximated to be $700 Billion and growing.
It would be a serious error for anyone to underestimate the Hispanic presence in the world of entrepreneurs. With over two million Hispanic-owned companies currently in the United States, with more being added every month, it is obvious that the Hispanic community is seeing itself represented more and more frequently in the business community.
One way that Hispanic-owned businesses are making their presence known is by entering the venture capital arena. When a venture capitalist helps a minority-owned business, there is a tremendous amount of goodwill built up. This goodwill is often translated into business and networking opportunities that benefit both parties involved.
Venture capitalists often find themselves actively seeking out new investment opportunities that are designed to benefit the Hispanic community. More than ever, investors are looking to build a strong base in the Hispanic and Latin America communities. For example, according to the Latin American Venture Capitalist Association, venture capital and private equity funding more than doubled from 2009 to 2010. This is a trend that has not been seen anywhere else in the venture capital community. This means that Hispanic start ups currently find themselves in the middle of one of the most start up-friendly economic periods in recent memory.
One reason that more and more Hispanic venture capitalists are emerging onto the scene is because of the tremendous growth opportunity available. The United Nations commissioned a study on the number of “poor” citizens in the Latin American population. In 2002, 44 percent of the population was considered poor. In 2010, that number dropped to 32 percent. In other words, in a period of eight years, the Latin American middle class grew by 70 million people!
GROWING START UPS
Entrepreneurs who are looking for someone to fund their start ups are finding themselves being met with a warm reception by Hispanic venture capitalists. Having been standing on the sidelines in the past, Hispanic venture capitalists now understand the benefits of taking chances on new businesses, both Hispanic-owned and otherwise.
Organizations such as HITEC and the Latino Coalition are becoming major advocates for Hispanic businesses, working towards creating a business environment in which Hispanic entrepreneurs can truly thrive.
One way to keep current on the role of Hispanic and non-Hispanic venture capitalists is to subscribe to the HITEC blog, which provides a wealth of information on a wide variety of topics, ranging from IT professionals to the economic climate.
These venture funds have dedicated themselves to sourcing and investing in business that target the Hispanic community. However, there are other, multi-strategy, funds such as Carlyle and Vestar who have invested in businesses with similar missions. And while this VC group is small and intimate now, as the growth and buying power of the Hispanic community materializes, it seems logical to assume many more investors will enter the fray.