2018 State of Latino Entrepreneurship Forum Part 1

2018 State of Latino Entrepreneurship Forum Part 1

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When. Does he yes, all. Right, like. That, hi. My name is Victor odious and I, am, the. Chairman of the Latino business Action Network which, is the one of the collaborators for this event. And I'm, also I had the privilege of serving as a trustee, at Stanford, from. 1996. 206, gave. You a heap though, I, grew. Up in El Paso Texas, anybody, from El Paso. All. Right. Do. Anyway. I flew, in last night from Dallas, and. It. Was a plane, was late I was just it. Was tough I didn't get to my roof to about one o'clock so I'm a little bit sleep-deprived. But. When, I woke up this morning, kind, of out. Of kilter I thought. About the things that my first, wife told me actually, she's still my wife. What, she told me before. I left my house and she said. Make. Sure that. You don't try to be witty, or. Don't. Try to be intelligent. Or charming. She goes just be yourself, I. Finally. Understood, what she met this morning. Anyway. She also reminded, me that one. Out of 1,000. Men. Are leaders, of men and the other 999, follow. Women so. And, I think that's one of the themes for today, in, all seriousness welcome. To this great event state. Of Latino entrepreneurship, it's our third. It's. Just a great gathering, I mean we had, 600. Plus RSVPs. I mean you can see that this room is full there's some that are still coming in there. On Latino time but, I'm glad they're coming in hmm, we're. Also live streaming this so welcome. To our folks. That are visiting us on livestream, so, let's. Give a round of applause to yourselves, for that and everybody that's on watching us on livestream. And. So, as I mentioned this event is brought to you by the. Stanford Latino, entrepreneurship, initiative, it's. A collaboration, of. The. Latino business Action Network and Stanford. University but more specifically. The Graduate School of Business and. In. That we will be speaking. Much more about this the we will provide an overview of these organizations. As a part of our presentations. Today. And. The purpose is really to uncover, research, from. Our from, our prior research, but just but new research and, you'll be hearing from Paul, Moyer and Marlene. Orosco a little bit later on these, research findings and, you'll also hear from real-life. Entrepreneurs. Latino. Entrepreneurs that. You know is the moderator, but Latinas. Are the actual panelists, and actually while we got one other at the you know sorry but it you'll be hearing from there some real stories, of, what. They've gone on through and their successes. Stanford. Is an integral part of this project I, had. The pleasure of speaking. With the president of the university he was actually in Dallas last night on a tour, and. He was heading off to Houston this morning but mark Tessier Levine came. To this university a year ago and, you. Know he said that among. The other things at his inauguration, but it was important, to be to being. Purposeful. And to being fearless for, Stanford, and. However. He is concerned he told me last night about Stanford's. Great successes because that can breed complacency and. And. And he just doesn't want that to happen he wants to ensure the Stanford continues, to, create. A better place and just improve, this world he. Said. That slay is that kind of a project that the, Stanford Latino entrepreneurship, is and if is that kind, of a project that creates, a better world by being purposeful. And being fearless and so, he sends his proud regards, and. I'd like to just give in absentia of a, round of applause for marked, si Laguna. And, at, the end of the program. You'll. Be we. Encourage you to stick around there's there'll be copies. Of the of, the actual. Research. And. And. On the back of the executive, summary you'll find a QR code that you will direct you to the to that latest report as well of the stuff you picked up today, and. You will also hear from the. Dean of the business school John, Levin and I'll, introduce him a little bit later he'll close but. In the meantime we. Are really, privileged to have with us a current. Trustee, of the. Stanford University Board of Trustees and, his. Name is Fred on Vitus and Fred grew up in El Paso Texas. He. Excuse me Las Cruces New Mexico. So. We argued backstage, that I'll pass was a suburb of Las Cruces New Mexico, but. He is really one of the most, prominent preeminent. Employment. Lawyers in the United States, his. Practice combines, a unique blend of public service and he's always been been sort of geared by that in. His legal profession, he has been part. Of individual, in class-action lawsuits, claims. Brought by private, and governmental parties, and by former senior executives, he, has testified many times before Congress. And, and. He was appointed by President Reagan, and confirmed by the Senate and, serving two sub.

Cabinet Positions. He began his career as a trial attorney with the National Labor Relations, Board, he. Was the former chair of the ABA Commission, on racial and ethnic diversity in their, profession, and. Has served on the ABA Commission, on women in the profession, he's a former, president, of the Bar Association of San Francisco, he. Is finishing, off five. Years at on, the Stanford Board of Trustees and he also chairs the board, of governors of public, advocate's, and he is a true. Person. A member, of our community and I call them real hinting and, you all would know what that means and so with you with, that I'd like to introduce, mr., Fred in Venice. It's. My pleasure and. My privilege really, to, represent. The University, and the board of trustees at. This gathering. It's, hard to think of a. More consequential. Development. In. The business world than. The dynamic state, of Latino. And Latina. Entrepreneurship. In our country, especially. Now and especially. The contribution, that we see from from. From us, today. We'll have the opportunity, to. Hear where, we are where. We're going and about. The ongoing, challenges, from a. Remarkable. Group of entrepreneurs who have gone out there. Taking. Those challenges, on and made a real impact, but. The key thing we'll, hear today and, what, we really, have to understand, is. That, the Latino latina owned businesses, are the fastest, growing, entrepreneurial. Segment, in, our economy. If. It wasn't for the two trillion plus that. Those businesses, contributed. In. 2015. Our. Country, would have had fewer businesses, in, 2012. Than it did even five years earlier, in 2007. Our. Latino. Latina businesses. Have, kept the, US community. On a business. Community on a positive. Track, but. Do we really know about that, do. Our public, policymakers, know. That very, important, simple fact and do they appreciate it, to. Me addressing. That lack of information. Combating. The impression, that our, Latino latina businesses. Are not a growing, and vital part of our business community that is.

What Today is about. Stanford. University, is proud to, be, a part of the solution to that problem. To. Help provide a forum, not. Only to study the impact of Latino. Latina businesses. But. To provide a venue like this. Where. Very. Talented people can gather to. Help get the word out, this. Is important, to the universe for several reasons. First. We. Want to be leaders, supporting. Latino research and, entrepreneurial. Programming, and supporting. The Stanford, Latino, entrepreneurship. Initiative, here at the GSB is a, critical, part of that leadership. Second. We, want to engage the community in the process, Stanford. Alums and all of our colleagues from the Silicon Valley and all of you. To. Help sure to help make sure that everybody, understands. The. Opportunity. That, the Latino. Latina business. Community, presents, and. Third. We. Are just, beginning to understand, that the. Future of. Stanford. And of. The universities. And of American, businesses, are all tied to, the future of the, Latino business, community. The. Research you'll hear about today makes. That point more. Clearly than I can and the. Voices we'll get to hear today, tell. Us how that'll happen and tell. Us what the obstacles, have been to, having it happen more, we. Are at a point in our country. Where. Our universities. And including. This one need. To engage the. Latino, community, and need. To understand, that the Latino latina business, community, can drive, success, for. Everyone and that. Process, starts, right. Here and it. Starts wherever. And whenever the. Data and the information that, comes today. Gets. Shared. So. Let's make a commitment. And let's. Commit, to spread the data and the. Words we hear today, let's. Don't leave them in a report, let's. Don't put them on the Shelf let's. Don't leave them attached to an email that. We lose. In our email, pile, but, let's get the word out. What. What we hear today is important, for everyone to know about people. Outside this room should know, that. The Latino latina business, community. Can be and is. Right now a. Dynamic. One and is, serving as an engine, to. Drive our entire economy, forward. Thanks. For inviting me. Thanks. For asking, me to spend a few minutes here and let me be, here to, witness all that goes on today but.

More Importantly, I want to thank you for being here, and for, all you've done to get us here thank, you. My. Name is Jerry Porras. I'm. An emeritus faculty member, here at the Business School and, I. Along with Paul lawyer who you'll hear from in a few minutes and the, faculty, director of the Stanford Latino, entrepreneurship. Initiative, which. We. Called slay now you heard that I just wanted to confirm that that's what it's Leigh is a Stanford, Latino, entrepreneurship, initiative. I'd. Like to give you some background on, why. Slay exists. What. It's trying to do and how. It's going about trying, to do it because. Sleighs activities, spread, beyond the research. Effort, that you'll be hearing today. Very. Simply put. Slay. Exists, because, of the importance of Latinos, and Athena. Entrepreneurship, to the US economy. That's. That's the summary statement. But. How do we gauge that importance. We. Gauge it based on the number of Latinos, first of all as, individuals. In the country and consumers. And, workers. And, we. Also gauge, it in terms, of the numbers of latino-owned, businesses that. Exist and. I'd like to say a little bit about both of those things. Currently. There. Are over 52. Million Latinos. In the United States making. Up about 17%. Of the population. By. 2050. This. Number, is, expected to grow to, about. 133. Million or. 30%. Of the, population. So. Imagine a future in which one-third of your population. One-third. Of your workforce. One-third. Of your consumer base is all, Latino. In. Parallel. The. Number of Latino owned businesses, is also. Growing in dramatic. Fashion, on. Average. In. The last decade, and a half. The. Total number of Latino, own businesses has, grown at a rate of about, 1, million every 5 years. On. Average 1 million every 5 years. In fact. As Fred said and, I want to reiterate it were. Not for the dramatic growth of Latino and businesses the total. Number of businesses, in the United States would. Have declined, in the decade, between. 2007. And 2012. So. As Latino businesses, being founded, during that period that kept the overall, number. Of business of the United States growing. Now. Paul lawyer is going to show you some, more data on these growth numbers and and and, comparisons. With with, other populations. So. It's out of this context. Of. Dramatic, Latino, population. And business growth that. Slave was born. Slay. As Victor. Mentioned is a collaboration. A. Collaboration. A collaboration. Between Stanford, and the Latino business Action Network which. Is a 501, C 3 organization. That. Was founded by five. Latino. MBA. Alumni. And me. In, 2012. Ella. Bands mission, as we established. It is to. Strengthen our country, by. Promoting the growth of large Latino, owned businesses. That's. What we're about we're wanting to promote the growth of latino-owned. Businesses as, a, way. Of strengthening the, economy, and strengthen this country so. That's our long-term. Effort. In. 2013. A year. Later slay. Was created, as a, collaboration, between Stanford, and Alvin the, plan, was. For El ban to. Generate, program ideas, around research and education, then. Collaborate, with Stanford faculty, members to make these programs a, reality. Funding. For these programs would, come from both Alvin and Stanford. So. That those were our plans those are our ideas at, the beginning. So. How we gone about fulfilling the mission and what have we done you. Know what's our track record been, well. First of all let me describe, to you that that, our mission was divided, into three major, thrusts. In terms of concrete actions, the. First is we want to do research and in. The research area we wanted to create a very massive database, on latino-owned, businesses that, could be used by researchers all, over the country and. We. Wanted to conduct research, drawing.

National Surveys. And. Create. More in-depth knowledge about. Latino and businesses, and, very. Specifically, about the key barriers to the growth of these businesses. The. Second thrust was in education, and, here. We were planning to create programs focus, on helping Latino, entrepreneurs build, very large businesses. And what. We're talking about when we say very large businesses, is we're talking about 500, million billion. Dollar businesses, greater than a billion dollar businesses. Number. Of business of Latino businesses, that are that size today is, quite, small, we. Wanted to increase that number dramatically. That's that's, what we wanted to do and, finally. The third major thrust, was. Ecosystem. Development. Because. We recognized, very early on that. Latino-owned. Businesses operate. In an ecosystem there's, not very supportive, of their efforts, they. Tend not to be a part of that ecosystem or. Have access to it easily. So. We wanted to try to. Change. That by, building an ecosystem, around. The. Country not just here, in Silicon Valley but really around the country those. Those, are our plans that's what we wanted to do, so. What have we done. In. The research, area we've. Actually built a database currently containing, information on, more than 1.3. Million Latino, own businesses. We've. Conducted national, surveys, three, of them in fact, from 2015. And 16, and 17, annual surveys and presented. The results of, these. Surveys in. Conferences. Like this this is our third annual conference. Finally. We've. Assembled a group of academic, researchers, to, take the data we generated, and along. With their own data conduct, additional research. This. Group was drawn, from researchers. All over the country let. Me say that there aren't many as. You might imagine. But. This effort has produced a book of readings to be published in the latter part of this year and it's. Our intention to continue developing, this academic, group so, as to spawn more interest, among researchers. Nationwide. On the topic of latina entrepreneurism. We. Believe that that. If we can promote, more, of an academic interest in this, field that, awareness. Of it and knowledge about it can. Be generated, by many many, more entities. And. Universities. Than what we're doing here. What. Are we done in the area of Education. On. The education front we, created a six-week, hybrid. And. The hybrid is it's both face-to-face and online. Program. Focused. On scaling, companies. It's. Offered twice a year in the fall and the summer, today. We've run the program five times and received. An average of over 200, applicants, for each of the five cohorts so there's, broad ranging, interest out there. 80. Latina entrepreneurs, from all over the country are selected, to participate in each cohort. Representing. A wide range of industries and geographies. We. Restrict participation. In this program, -. First of all companies, that. Have existed, at least three years and have annual revenues of at least a million dollars. So. We're wanting to focus on those companies that we think have the greatest chance of really becoming big.

Or. If a company is at the startup phase they've. Raised at least half a million dollars for professional, investors and look, like they have much much promise, to. Be big in their, future. The, program is based on a online, course developed, by Stanford professors. Huggy Rao and Bob, Sutton the. Ideas for this program, came from their book title scaling for excellence. So. We take their fundamental. Their basic program, and we, augment, it with a, variety of activities. First. We. Have three days at Stanford, two days at the very beginning and one day at the end when all of the participants come here, we. Have created videos of latina entrepreneurs, who have successfully scale their companies and provide excellent, role models and fed those into the program. We. Have a mentor, for every student and this, mentor meets with that student at least one hour a week. To. Discuss whatever, it is that's important to the growth of the company we've. Created webinars, that focus on various. Types of capital, because. Not all businesses, can use or require or able, to use all types of any type of capital so we want to have the, entrepreneurs, be intelligent, about what type of capital should they have access to and how, to go about getting it and we've. Created a network and this this was, something we hadn't thought about at the beginning but it's become more and more obvious as, time goes by a. Very, powerful network, of current and past participants. So. People who have been in the program are. Part, of the, learning, that goes on inside of the program and, in fact I think we have a fairly large, number of our. Alumni, in, the audience if you'd raise your hand to kind of give give us a feel where, I want to say welcome to you all these, are folks who have participated in the program and, can give you firsthand. Descriptions. Of their experiences, with it if any of you have rich it. More. Will be said about the characteristics, of our participant, organizations, to get a better feel for what they're like by, mark Madrid who will follow me the. Program will be modified in the future based on findings, from the research that, inform. Us more fully on the barriers to growth facing, Latinos, and Latino, businesses. So. The final then thrust that we were interested in developing, was. Ecosystem. Development. So. We wanted to provide support, for the growth of their own businesses, and by, to do that we were building a network of mentors. Drawn. From participants, in our program and we have now about a hundred, or across, the country from. Capital providers. From. Latino. Business, oriented. Organizations, across the countries such as the Hispanic Chamber of Commerce and local. Development, organizations. And. Then. Finally, once. Again the alumni of our, slate. Program, the. Alumni are providing an important input into this ecosystem because, they can provide. Information to. Each. Other they. Can provide help and support for each other, and. A. Mantra, that we like to develop and and I think Marc is going to repeat it in the program is. Those. Of you who are alumni the program what's the mantra. Do. Business with each other and, get. Business for each other, so. That's part of the development of the ecosystem, is having people who. Are Latinos, running, businesses doing more, business with each other. So. In closing this is what is this is of what why and how a slave. We. Believe that the future of our economy, will. Be heavily dependent on the contributions.

Made To it but, by both Latino, consumers and Latino entrepreneurs and. We. Want Schley to. Make a big difference in building that successful, future so. I thank you for being here and I'd, like to introduce. Marc. Madrid, executive. Director of slay who, will say, a few words about the, program and introduce our panel thank you. Thank. You professor Boris, it is the highest honor to work with you and chairman, adios the. Board in our team and certainly. The Stanford, ecosystem. So. More about our alumni, base of, the Stanford Latino, entrepreneurship. Initiative, education, or slated scaling, program. It's. 350. Strong, that number they're, coming from under, just, under 30 States, they. Employ over 17,000. Across the country and earn. Combined, annual revenues, north, of, 1.2. Billion. Dollars. Exactly. So. If you do the math the, average annual revenues, for our graduates, are three point four three million dollars with just under 20%, earning. Over 10 million that's. Gross annual revenues, although. We have consistent, representation. From Latino business strongholds. California. Texas and Florida we. Are delighted that in our last fall, cohort that, we graduated, our first entrepreneurs. From. Salt Lake City and Omaha. Of note. 29%. Of our graduates, are in tech and we. Are proud our 95%. Graduation. Rate. Of slate participants. Which, is the highest of any Stanford, GSB. Executive. Ed program so 95%, graduation rate. As. Well. Our alumni networks across the country have, mobilized, on their own accord creating, business networking, regional. Hubs which. Embody our mantra. Do. Business, with each other and get. Business for each other I saw the alumni. Our. Graduates, are the humanizing. Aspect. Of the research and have, excelled in the Stanford GSB executive. Platform, one. Of our featured, presenters, of the slate curriculum, is the person who, I'm have the privilege of introducing to, you now, Paul. Or is the Fred H Merrill professor of economics, at the Stanford, Graduate School of Business, he. Is also a research associate with. The National Bureau of economics. And editor-in-chief, of the Journal of labor economics. Here. At the GSB Paul, serves his faculty, director, of the, Stanford Latino. Entrepreneurship. Initiative, and the center for entrepreneurial, studies in. Addition. To his research activities, in labor economics, Paul is the author of two books, listen. To this everything. I ever needed, to know about economics, I, learned, from online dating. Explains. Key ideas, in economics in, an, annual setting. And, roadside. MBA with. Michael Maggio and Scott Shafer is a non-technical strategy. Guide for small businesses, based, on the author's extensive, travel before. Moving to the GSB in 2000, Paul, was one of the faculty of the Kellogg School at Northwestern, University, he. Went to Middlebury, College got, an MBA from Yale University, and a, PhD in economics from, Princeton, please, welcome Professor Paul or. Okay. Thank you thanks. Very much mark, Valentine's. Day is coming up so my online dating book, makes a great present, if. Any of you are looking for a little last-minute thing, for, your. Significant. Other who's very interested, in economics, so. Thanks. For that introduction. I'm Paul lawyer I'm the faculty director along, with Jerry of course of slay. Jerry is the father of slay, I like, to think of myself as kind of like the mildly. Helpful, brother-in-law, of sway and so. I got involved in this in the last year or so because I'm. One of the faculty directors, of the GSB Center for entrepreneurial, studies and, I have the pleasure now if working with Marlene and with, now, more, recently with Ileana who's joined our research team they're, extremely, devoted to the research goals of slay, and I'll, just also note, in passing that one of the most rewarding. Parts, of this has been getting to meet the slate IDI people, as they come through that program so I'm happy to see so many of them here today Marlene. It's much closer to the details on she's, gonna give you more of that than I can but I will give, you a little bit of a high-level overview of what we're up to in this year's report so. As you know the u.s. Latino population. Is large is huge. And it's growing fast the second fastest, growing race, or ethnic, group after Asians, and the largest minority group in the United States, and. Predictions. Are that you, know right, now the immigration. Future, is very much up in the air but given the young age of the current Latino population, and the high birth rate we, would expect that it would come even a larger part of the United States going forward so, obviously. The Latinos are somewhat. Concentrated. In certain areas, but they're becoming an important demographic group, everywhere.

Any, Group, as large as Latinos, is obviously a very, important part of the overall economy and it's important for businesses, policymakers. In the entire, country but. And, and it's worth noting if the American. Latinos, were their own separate, country, they, would be the seventh, largest economy, in the world with a GDP, roughly equal to the 1.3. Billion people of, India. So, it is obviously, an important economic force, in the United States now, having said that the. Latino population here, in the United States is generally, in a somewhat precarious position, at. The Entrepreneurship, level, they own businesses, at a lower rate as I'll give you some, evidence of in a second the economic, challenges to the Latino, community go, well beyond dr. Bruner ship given. That the average Latino. Household, has one-fifth, the wealth of a typical American, household and. The. Latinos. Earned about 65, cents on the dollar relative to the broader population so. I'm, gonna focus on entrepreneurship, but we need to think of this in the broader set. Set. Of challenges for this. Community so back to the Entrepreneurship, focus, I've taken this graph out of our out. Of our report, that more lean will go into more detail on and it, this graph this one graph show us both the sort, of challenges, and the. Hopeful. Story going forward so if you, look at the red line versus. The orange. Line the, top line versus, the next line down that, and and just generally, the levels of these lines those tell you why the. Where, the story, we have to tell is somewhat, problematic the. Overall rates of business ownership while, fred and others have mentioned that that's really been, an important part of keeping American, businesses, growing, overall. At Eno's owned businesses, at them two-thirds, the rate of the population as a whole and I, think more problematically. And this is what's lay is specifically, aimed at addressing the Green. Line at the bottom shows you that, Latinos. Owned scaled, firms or that is firms with employees, at, three. One-third. The rate of the population, as a whole so, the level of entrepreneurship, is lower now the hopeful, side comes from how so, the the problematic, side comes from the differences, between these lines the. Hopeful side comes from the sort, of hopeful uptick, in some of them that. Is the growth side of things so, gap number one that I mentioned before that is the difference between overall. Ownership, and the. Latino population rate. That's closing, you can see the the, rate, of Latino entrepreneurship, is is kicking up relative, to other groups. And that's good thing that's, a good thing for closing the gap gap number two it's a little harder to assess given. The smaller numbers, but Marlene is going to show you some figures regarding.

Businesses. Started by Millennials, that she just progress is possible in terms of bigger Latino, companies, as well and then, as we discuss in the report and these are estimates based on research, done by our. Estimates. Done by our new researcher, Ileana Perez there, are as many as 5 million Latino, owned businesses, in the United States so in terms of sheer numbers there's, plenty of activity, but most of these are very small, and don't have any employees beyond the person who runs the business and that's what slay. Is really trying to get at as, I. Said before business. Latino businesses, are underrepresented in every. State in every metropolitan area. We know that thanks, to an analysis done by our know Bo more alex and i'm sorry if i pronounced that wrong are no bo you're out here somewhere if i'm not mistaken right I can't, see him oh he's. Up in the back hiding up in the balcony it's, like my students, who hide in the Skydeck, so. Our no bo is working, on helping. Us analyze, this gap in more detail, at a more refined. Geographic, level and just. Some, very preliminary, findings. That he's given us and we'll have more of a report on this in coming weeks to distribute, more, widely are, no BS using census, data which are based on huge samples, so we can look at these very refined. State. And geographic. Area. And now he can do very refined, analyses, what our Noby is found is that Florida the state with the smallest, gap between, Latino, rates of business ownership and the overall business ownership, rate that's, not because Florida has a high, Latino, population. Share though it does because. Our, novias estimates, are adjusting, for the size of the overall population in the fraction of residents, that are Latino so, he's basically comparing. What fraction of Latinos, owned businesses, in a given geographic area. To the fraction, of all residents of that area that own businesses and within, Florida a few big cities stand out as real hubs of Latino, entrepreneurship. Remember. That even in these cities Latinos, are underrepresented as, business owners but they're much less underrepresented, than, they are in other places. California. On the other hand in lausanne in particular, have extremely, low representation. Of latino-owned, businesses and. You, know at this point we're just starting to understand, these numbers so we know a lot to say about why, these patterns. Are what they are you, know somebody, who as somebody has looked at this a little bit you might suspect Cuban concentration. Historical. Cuban concentration, has something to do with it but I don't want to get ahead, of ourselves we'll, do more analysis, to figure out exactly what's driving this anyway, I'm just introducing a few numbers now our know beyond the slave research team will, be more focused on localized.

Reports Going forward and and we'll have a fuller report that we'll be releasing in the coming months so. So. How do we help the Latino community to, continue, to close the gap and become, a more significant, share of the ownership of businesses well I'm a I'm a broader, labor, economist. By day I don't always focus on entrepreneurship, so, there's one huge set of challenges we, can undertake to, address the Entrepreneurship gap. That's beyond the scope of what we're talking about here today and that is it a nationwide, societal. Level we could try to address the very fundamental, difference as, an opportunity, that. Exists, for kids and adults for that matter based. On where they're born and circumstances. In which they grow up so we have here, at Stanford, we have a lot of people studying the inequality. Issues, in equality of outcomes, in equality of opportunities. All over the university, and that applies well beyond upper entrepreneurship. But oh I'm, not going to try to answer that that I'll just point out that helping, Latino. High school kids have the tools they need to compete in the economy, of the future would, do a lot to close the gaps that I'm talking about it's not going to happen tomorrow but that certainly should be in the bigger picture so, what can we do in the shorter term and more specifically, focusing, on entrepreneurship, well. The most important, gerri sort of God at this so I won't go into in any great detail that's, what slay and El ban are all about is trying to build a network we, at the GSB you, know do our little, part with, all the diverse, students. We touch through many programs but, of course you, know we're one small institution. Were one, small, part of fixing the, disparities. We've been talking about programs, like Slade are great, of course and all. Sorts of other little. Things can be done I just want to point out I want to and though I, want, to I want to show you one more graph why, do we need to educate Latino. Entrepreneurs why why do they need more preparation this this, is another from. The report we're unveiling today another, graph. From that that. Shows, yet among, Latino owned businesses, we reached with our survey, there are some real holes in just having the basic, material, needed to, interact, with the financial, community and with business partners, so, even the vast majority of the scaled firms in our survey didn't, have a business plan or a financial, plan available, to use for external, funding and so. As a result of this these, firms get left to use their own friends, and family's funds but, as I mentioned at the outset the typical Latino, household. Has, a smaller, set of funds to draw on, so. Finding. Financing, is holding these entrepreneurs, and potential, entrepreneurs back, but, what's holding back even. What's holding them back from getting that financing, is among other things not having, the tools to go about getting, the fundraising, and so there's, some bottlenecks, in the education, process and the fundraising process that I think we, can think about trying to address going forward so, let me just summarize by saying that, Latino businesses, face gaps in terms of being underrepresented. Overall. Being small being relatively, unsophisticated. And, under finance they, also face the additional. Challenges, that as income inequality. Has increased dramatically, in recent decades, many, Latinos, have been left behind and Latino entrepreneurs like. All entrepreneurs face, the fact that business creation levels, have slowed but. You, know there's a positive story, to tell because some trends are in the right direction the start-up rates for Latinos, is higher than for other groups so, they're catching up and the younger generation, of Latino entrepreneurs, is making, progress and starting businesses that we think have the potential to scale or that have shown some evidence of the, ability to scale, institutions. Such as the GSB are going to be crucial for helping to close the gaps because. Providing. Latino entrepreneurs with business training and entrepreneurial, skills will help but, of course we're a very small part of this and. Other. Efforts through slay and others are. Gonna be a, bigger part of closing. Some of the gaps I've been about so, with that I've introduced, the basic idea let me pass it along to Marlena, Rusco the, lead researcher, on this year's sole, report, who will give you more details, on what we found. All. Right good morning and thank you professor Paul Boyer it's, a real pleasure to be here with you all today to share, our key, findings from our 2017.

Survey, Of US Latino business owners so. Before we began collecting data in the summer of 2017. We knew a few big-picture trends, about that Deena owned businesses, some, of which Paul has already covered we. Knew that that the rate in which new latino firms are being created is outpacing, the population, growth we. Also know that Latinos, are starting businesses at a higher rate relative to other demographic, groups, still. Scaling, remains a challenge as our, survey data revealed that, about three percent of Latino own businesses, are generating. At least a million dollars in annual revenue, or more per year we. Defined this group as scaled, firms which. Serve as one benchmark, in which to measure the success of business owners in our survey in. Contrast. There are about 6% of skilled firms in the non minority, population, in the u.s. in. 2015. And a similar convening, like this one we had reported, to you all on the immense opportunity. Gap of one, point three eight trillion. Dollars left, on the table if only latina own businesses were, as large as their counterparts in. Today's. Dollars that's about one point four seven trillion which. Leads us to today this. Is our third annual collection of national, survey data on Latino businesses, and every. Year we learn new information about, the mechanisms, driving this, opportunity, gap and the overall growth of entrepreneurship. Among Latinos, in the u.s. in, our. Survey of over 5,000. Independent, Latino business owners in 2017. We, dig deep on the, funding gaps facing latino-owned, businesses and, their strategies, for success, we. Augment, these data by interviewing, alumni, of the Schley education, program a few, of whom you'll hear from later today and. So. In what follows I'll be presenting key findings, based on the analyses of the 2017. National, survey so, let's start by reviewing, a few key findings. We. Collect a lot of data on the funding types Latino. Entrepreneurs use to grow their business we, focus on external sources of funding, as these. Are key to helping a business scale, these. Include bank loans at both the note the national and local level, government. Funding venture. Capital, investment. Funding and a few others, what. We're finding is that national banks are providing, less loan funding, to latino-owned, businesses relative. To other funding types and other demographic groups. Secondly. Because, we have such a large sample of Latino business businesses, we, can slice the daily data in a number of ways this. Includes looking at female, owned firms. Compared, to men immigrants. Versus native-born, Millennials. Versus non millenials and large. Versus, small firms, which we call scaled and unskilled. Among. Latina, owned firms we, find that they're growing at a rapid, rate however. Latina, entrepreneurs, are facing a funding ceiling which I'll talk more about in just a bit, so. Next we're able to slice the data and look at immigrants, in particular. Millennial. Immigrants, which constitute, a daca comparable, group well. We do not ask about immigration status, in our survey we, can proxy, this group given the nature of our data, so. Our analysis. Reveals that millennial, immigrants, who, came to the US as children are. Over-represented. Among owners, of immigrants, sorry, of owners of businesses earning 1 million or more annually, and. Lastly. We consider strategies for success. We. Find that relative, to other demographic. Groups, Latino. Entrepreneurs have, the highest rate of business. Customers, and clients outside. The US so. Given this propensity to be global minded stakeholders, can develop best practices around international, expansion, so. Let's now consider the key finding about national banks a bit more, first. It should be noted that the Schley survey, considers, only entrepreneurs of, Latino, origin so. Whenever we invoke other demographic, groups in this presentation, we're, leveraging other data sources. Particularly. The US census survey, of business. Owners and the annual survey of entrepreneurs, which, is a Kauffman and census collaboration. But both datasets allow for a comparative lens and this, latter data source the annual survey of entrepreneurs. Focuses, only on employer, firms or, those that have paid employees, which, make up 9% of the Latino business ecosystem. Still. This group of employer firms can, serve as yet another measure of success, employer. Firms are more likely to be skilled firms but, not all employer firms are skilled firm so it's important to keep that in mind. That. Being said this. Figure looks at funding used to start employer firms if. You look at the red bar across all demographic, groups we. See that only, 12% of Latino businesses access bank loans compared, compared to 18% for white 14.

Percent For black and 15%. For Asian owned firms in. Our. Survey we asked about several types of external funding sources so we're able to compare across funding, types and across, different Latino profiles, so. In this next figure, across. The x-axis on the top we, have the Latino profile groups which, I've already mentioned to you all but these are by age gender. Nativity. And revenue, and the. Y-axis captures. The different funding sources in our survey, we. Find that bank loans are accessed, at very low rates. To. Grow that you know businesses, although we see greater use among, local baked local, bank loans relative, to national bank loans we're, also seeing higher use of lines of credit including personal, and business, lines which can come from banks among. External, funding types we see that the lowest rates of use come, from government funding. So. No matter which way we look at these institutional, sources of funding the bottom line is that Latino owned firms are not being funded on average, through traditional financial institutions. There. Are a lot of reasons for this it may, be banks are not willing to take the risk on smaller firms as we. See slightly higher use among skilled firms on the. Other hand we, know that, some of this also has to do with how prepared Latino business owners are in accessing. External, funding in our. Survey we asked about the materials, they had on hand for their business on average. About one out of every three Latino, firms reported. Having the necessary materials, that are required of them in order to obtain external. Funding, so. Professor Paul already, showed you this figure here but this comes from our survey, where, we asked Latino. Entrepreneurs what materials they have prepared, and, again, you can see the. Different materials. There and if we look just at business plans which is on the lower right-hand corner the. Red portion of the circle represents. Scaled firms and the blue represents, unskilled, firms so, what we see here is that 36%, of skilled firms have, a business plan compared, to only 20% of, unskilled, firms still. These are pretty low rates for. All that vina firms and that's probably probably, why we see workshops, focusing, on these business outputs, as there's certainly a need for that and. As. Privily previously, mentioned to you all skilled firms or those generating, at least a million dollars in annual revenue, or more serves.

As One benchmark. Of success, we. Consider an additional, benchmark, in our survey and that's, profit, growth. Sixty-two, percent of Latino firms surveyed, reported profit. Growth in the last twelve months and, we. Do know that among those firms that experienced. Profit, growth they, were more likely to have a national, bank loan this. Speaks to the remaining importance, of institutional, funding as we, see other funding types like, hard money here accents on the top this. Is being accessed at relatively, higher higher, rates hard. Money is secured from, private sources and is less reg regulated. Than formal business loans because. Hard money is easier to access and may be more attractive, for the business owner despite, higher interest rates. So. Now we're going to shift gears a little bit as our. Survey sample allows us to consider different, profiles, and. Of, Latino entrepreneurs and the experiences, they face in growing their business. One. Such profile that we consider is that of the latina, entrepreneurs, which is our next key finding. Latinas. Play an important, role in creating new businesses, representing, nearly half of the growth of all US latino owned firms. This. Figure here shows you the growth of Latinas, relative, to other female demographic groups, and Latinas. Are highlighted, in red on both the top and bottom figure. Between. 2007. And 2012, the number of latina owned firms grew, 87%. Between. 2000, and in 2015. Latina, employer firms grew a number by 44%. While. The growth rate and number of Latina owned firms remains healthy that, they tend to be smaller than male owned firms. Among. The 3%, of skilled firms 30%. Are owned by women. We. Know Latinos are less represented, in the construction, industry which. Makes up for in 10 of the skilled firms and are, over-represented. In the other services, industry, classification as, compared, to male owned firms. We. Hypothesize, a couple of reasons why.

We Have seen a surge, in latina entrepreneurship. First. We know Latinas are achieving higher education, at a greater proportion compared, to their male counterparts. We. Also know that there's a wage gap among Latinas, the. Average woman working, full-time earns, 80 cents, on the dollar paid, to men, Latinas. Earn 54. Cents, on that dollar. What. We're seeing in some of the interviews with slay IDI Latinas. Is that they're often working hard generating. Lots of money for others and not. Getting promoted which, compels them to start their business, our. Survey. Findings show that despite the high levels, of business creation, Latinas. Feel they are not qualified, to access funding from fine financial, institutions, at higher, percentages, when, compared to men, when. We look at just those entrepreneurs, that, would like national, bank loans. We. Uncover barriers, to accessing this type of funding. Including. Not, knowing how to get it which is that orange bar, not. Having a relationship or contact, which is the darker blue bar and not. Feeling qualified, which is the red bar. We. See the largest gap among small firms compared, to skills scaled, firms. 60%. Of unskilled. Firms feel they are not qualified, we. See another gap among, men and women, 40%. Of women feel they're not qualified. Compared, to 21% of men we. Find that this gap holds, among. Women even when compared to men with similarly, sized firms, so, it's not just because, latina firms are smaller, that they feel less qualified. Thus. There may be a funding, seal either, externally. Or self-imposed, preventing. More Latinas, from reaching their full business potential. Next. We consider the profile of immigrants, compared, to native-born Latinos, as, previously. Mentioned we look at millennial, immigrants, who, came to the u.s. before, their 16th birthday. To, parallel a dock a comparable, group as the. Future of daca has been in the news a lot lately we, find that among Latino, entrepreneurs a, daca comparable, group is, over-represented. Among owners of immigrant, businesses, earning, 1 million or more annually, that. Is this, group is likely to have skilled, firms. More. Specifically, we, find that 86%. Of immigrant. Skilled firms are, owned by Millennials, who came to the country before their 16th, birthday and 29%.

Of, All skilled, firms are owned, by immigrant, Millennials who came before, their 16th birthday. We. Hypothesize, a few reasons why this might be first. Research. Has found that immigrants arrive with a sense of immigrant, optimism, that, propels earlier generations, to perform, well in school and have, high ambitions we. May also be seen a process, of. Psychological. Acculturation. Where, immigrants, develop an emotional attachment to their host culture. Lastly. Because these immigrants, arrived as children, they. Develop during their formative years in the American school system learning. English and many are also taking advantage of expanded, opportunities, in higher, education. So. Taken together these are likely to play a role in the success of young immigrant, entrepreneurs, as a. Final, structural, note which may facilitate entrepreneurship. Federal. And state laws do not require proof of immigration status for, an individual to start a business. So. Moving on now to our final key message, we. Find that Latino entrepreneurs, have the highest rate, of business, clients and customers outside. The US this. Is true among employer firms where, four point five percent, of Latino firms have clients, outside the US compared. To four percent for Asian two, percent for white and 1.9. Percent for black owned firms. In our. Survey. Among. All Latino firms we, find that 9% have, international clients, and 28%. Have, clients throughout the United States. Last. Year we reported that Latino businesses are located, all over the United States with. More than three-quarters in non Latino neighborhoods, serving. Mostly non Latino customers. This. Next figure shows. Our, 2017. Survey sample, of over 5,000. Latino businesses, plotted. On a US map, while. This here is merely a subset, of Latino, businesses this, shows us that, Latino. Businesses, are located in new entrepreneurial, gateways, across, the country not, commonly, associated, with entrepreneurship. We. Want to emphasize that while Latino firms of all sizes definitely.

Cluster In Latino dense states like, California, Texas, Florida, and, New York we, are increasingly, seeing Latino, firms and large ones at that established. In the South and Midwest and, you'll certainly be hearing from a few entrepreneurs from some of these regions in the next part of our programming. So. To conclude you can view a summary of the key findings here it is. Important to note the larger context, in which these findings are situated which professor, Paul or earlier has already provided for you all, Latino. Entrepreneurship. Is, growing. While catching up, Latino. Owned firms make 12 percent of all US firms but, Latinos represent. 17.6%. Of the total u.s. population. Another. An important, factor in this catch-up game is the, relatively lower level of wealth in the Latino, community and the funding bearers that Latino entrepreneurs face, as. As. Another important factor to consider is that. In the u.s. nearly half of us born Latinos are younger than 18 and, is. Shown in our findings today we, find great promise among, Latino, Millennials, and scaling their business as the. Younger Latino population, comes of age, we, have great hope for the continued growth of Latino entrepreneurship. And the, continued impact that, this segment of the population will have on the US economy. We. Encourage you all to take a look at our 2017. State of Latino entrepreneurs ship report. Which is available now, and. You, can hear more about you, can read more about the findings that I've shared with you today and others that we were not able to cover thank. You. You.

2018-02-18 21:57

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