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Funding Remains Scarce For Latino Tech Startups

Latino business owners have made strides, but access to capital still remains scarce.

Technological innovation in the 21st century has brought a lot of advances and fortunes. But unfortunately, Latinos and other minority populations in the U.S. are often left behind.

According to a 2016 report from the Brookings Institution, “Broadly speaking, blacks and Hispanics have made genuine progress in penetrating the nation’s tech sector. Black people, for example, have increased their presence in several important tech occupations, such as computer programming and operations research.

Likewise, Latinos have increased their representation in the overall computer and math occupational group, moving from 5.5 percent of workers in the sector in 2002 to 6.8 percent of workers in 2016.”

This progress has helped encourage Latino entrepreneurship.

Latino Entrepreneurship

In a more recent report about Latino entrepreneurship published by Stanford University’s Latino Entrepreneurship Initiative in January 2020, “Over the past 10 years, the number of Latino business owners grew 34%, compared to 1% for all business owners in the United States.”

The report also found that Latino-owned businesses with revenue growth of more than 30% per year has been in the following sectors: 1) manufacturing, 2) construction, 3) trade, transportation, and utilities, 4) leisure and hospitality, 5) other services (like personal care services, maintenance and repair services), and 6) education and health services.

However, as we look deeper into technological innovation and the participation of Latinos and African-Americans, we see a small percentage of these groups applying for grants or securing private funding for technological research and innovation.

Aside from educational factors, there is also a lack of participation in organized technological innovation.

While there are countless tales of how major technological innovations came out of someone’s garage, like Apple’s first computers in the 1970s and Amazon’s first web page in the 1990s, the reality is that the majority of innovative ideas and gadgets usually flourish in organized groups with great funding.

These organized groups have either come out of university labs of research or from a company’s research work that is primarily funded with government and private funding.

Top 5 Metros by Latino Workers’ Representation in Computer and Math Occupations according to The Brookings Institution.
Top 5 Metros By Latino Workers’ In Computer and Math Occupations.

If we look at the cities or metros that have made progress for the Latino representation in computer and math occupations, except for Texas, we see that metros in large states with a high percentage of the Latino population like California and Florida are not that showing even minimal representation of Latinos in those sectors.

If we look at the cities or metros that have made progress for the Latino representation in computer and math occupations, except for Texas, we see that metros in large states with a high percentage of the Latino population like California and Florida are not that showing even minimal representation of Latinos in those sectors.

Latino Business Funding

As Latino-owned businesses continue re-inventing themselves after 2020, one good source of funding for innovation research and new product development is America’s Seed Fund program, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR).

The America’s Seed Fund programs have been in existence for over 40 years with the aim of funding small businesses in research and development and bringing them into the market.

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For example, one award is a grant up to $256,000 in seed capital to cover expenses for research and development over six to 12 months. Other benefits from those programs is the chance to get feedback and work with an expert or mentor.

Additional details of National Sciences Foundation’s America’s Seed Fund programs can be found here.

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About the author

Claudia Araiza

Dr. Claudia Araiza has held positions in various capacities in business, academic, and governmental settings ranging from business and economic analysis, business development, academic administration, research, teaching, and online course development. She is a graduate from San Diego State University with a BA degree in International Business and Economics and an MA degree in Economics. She received her PhD in Economics from Claremont Graduate University. She lives in San Diego,California.

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