How Two Foundations Plan To Boost The Number of Latino And Latina VCs

Individuals of Latin American heritage are one of the fastest growing populations in the United States, while also comprising one of the most successful entrepreneurial communities in North America. Nonetheless, Latino/a individuals make up less than 5% of U.S.-based venture capital investment partners.

A new philanthropic initiative aims to change that.

According to a study published by the Stanford Graduate School of Business in collaboration with the Latino Business Action Network, from 2007 to 2019 the number U.S.-based Latino/a-owned businesses (LOB) substantially outpaced the growth of white-owned businesses (WOB), with the number of LOBs growing by 34%. In contrast, during the same period, the number of WOB dropped by 7%. During the COVID-19 pandemic years (2019-2022), LOBs also outpaced the growth of WOBs, with the median three-year compound annual growth rate for LOBs at 7% in contrast to 3% for WOBs.

Yet this growth in entrepreneurship has not been met by a corresponding growth in Latino/a venture capitalists and fund managers. According to a recent study by Venture Forward, the National Venture Capital Association and Deloitte, in 2022 Latino/a individuals represent only 5% of investment partner positions in U.S. venture capital firms. Latinas comprise only 2% of investment partners in 2022, a substantially smaller number compared to white, non-Latina women, who comprise 13% of investment partners during the same period.

In other words, Latino/a entrepreneurs are unlikely to see Latino/a venture capital firm fund managers sitting across the board room table negotiation term sheets.

In response to this disparity, LaFamilia Foundation, VCFamilia and FounderFamilia have partnered with Utah-based Sorenson Impact Group to launch ALZAR (“to rise” in Spanish). The new effort is a pilot program and philanthropic capital initiative that supports the development of Latino/a investment partners in venture capital. The innovative program, which is being launched just ahead of Hispanic Heritage Month, is funded in by a grant from the Sorenson Impact Foundation. Proceeds of the initial $250,000 grant will be used to support eight qualified Latino/a individuals with financial commitments and training resources to help them build operational capacity as a next generation of Latino/a VC fund managers.

The focus on elevating Latino/a venture capital initiatives has taken on greater intensity over the past several years, as awareness about the disparities between the number of Latino/a entrepreneurs and investor representation grows. Numerous established firms are focused diversity and inclusion initiatives to grow the ranks of Latino/a associates and partners within existing professional tracks. The new collaboration by La Familia Foundation is taking a different approach with its focus on developing nascent fund managers. In doing so, the new collaboration is bringing together some of the fastest growing Latino/a communities focused on both Latino/a founders and VCs, along with generous support and insight from Sorenson Impact Foundation, a pioneer in social impact investments and philanthropy.

“The Latino/a community will represent a massive economic and innovation output over the next few years,” said Af Hernandez, co-founder of VCFamilia. “With this foresight in mind, we built the ALZAR program to lower the barriers of entry for the Latino/a fund managers, allow them to invest in our community, and unlock Silicon Valley to the next generation of Latino/a entrepreneurs. Receiving this generous grant from The Sorenson Impact Foundation is a testament to the significance of our mission and the urgent need for equitable representation in the venture capital space,” added Hernandez.

“Entrepreneurship has the power to drive incredible progress in our society by identifying and addressing the gaps in the systems that define our everyday lives, like healthcare, education, and financial services,” says Jim Sorenson, founder and President of the Sorenson Impact Group. “That’s why it’s so important to support leaders from communities that are most impacted by gaps in those systems.”

“We firmly believe that backing founders that have lived experience drives innovation and creates stronger, more resilient economies. We’re grateful to be able to contribute to such an impactful program,” adds Lindsay Zizumbo, Executive Director of the Sorenson Impact Foundation. “By backing emerging Latino/a fund managers, we’re confident our funding will be used to catalyze the technologies that will define a brighter future for all.”

Applications for ALZAR are currently open and qualified candidates are encouraged to apply by September 29, 2023. The cohort will be selected shortly thereafter with the program to be fully deployed in 2024.

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