Latinos in Search of Capital & Capital in Search of Latinos:

LATINO INVESTOR MARKETPLACE

It is not a hidden fact that Latino owned businesses have the highest growth rate, and that the Latino community is highly entrepreneurial. However, there’s many more businesses that never start, or take too long because of lack of seed money or investment capital. Everybody has known for years, how bad is the situation when it comes to Latino businesses to access capital; lack of assets, lack of collateral guarantees, poor relationships with bankers, low awareness on funding solutions, and other are often cited as obstacles to start a business. On the other hand, we have an ever-increasing number of capital looking where to invest. Private equity, seed money, angel investors, and many other forms of funds are looking, sometimes desperately on where to invest. Not all this money in focused on Latino owned initiatives or businesses, actually the proportion is too low to even reflect the population, however some of these experienced investors claim there’s a problem with the “deal flow”, in which there’s a lack of good fluid communication between the two parties: the ones with the money and the ones with the need of it. In an initial effort to create more bridges between these two ends, we wanted to interview three investment funds and three entrepreneurs with the same set of questions each. Basically, what are they looking for and what are their needs. Also, what are their best qualities and strategies for their investments and operations. What kind of opportunities are they looking and what kind of investment is required. This is just a small sample of three great cases. We will continue to build these bridges on the future.

ECONOMIC IMPACT OF A MAJORITY-MINORITY POWER SHIFT

As the largest and fastest-growing segment of the population in the United States, the Hispanic community is poised to account for the biggest gains in wealth generation, investment, and entrepreneurship. Initially, interest in the Hispanic community was largely focused on immigration where the largest demographic of immigrants into the U.S. hailed from Latin America, particularly Mexico and Central America. This trend accounted for a substantial portion of U.S. population growth. Coupled with the Hispanic immigrants’ propensity to form families, in the absence of this immigration, the U.S. population would have stagnated and led to a major decline in economic growth.

I recently had the privilege of attending the Aspen Institute Latino & Society Program in Washington, D.C. where McKinsey & Company published and presented their study “The Economic State of Latinos in America”. The data was abundantly clear. The immigrant’s willingness to assume the risks inherent in migration bakes entrepreneurship into their DNA. Even though presently the Hispanic’s wealth per capita was deficient compared to the majority, the Hispanic community is largely responsible for entrepreneurship and job creation in America. This trend will inevitably result in substantial wealth creation within the Hispanic community for the foreseeable future.

The pandemic has provoked a mass migration from traditional employment centers like New York, Los Angeles, and San Francisco to Miami and Austin. I am confident that this will produce a major economic impact on Hispanic business. As a majority-minority (Hispanic) community with a diverse representation of nationalities, Miami should lead in this trend.

Anecdotally, I had a conversation with Angel Morales of Morales Capital Partners who recently moved to Miami from New York. A successful private equity investor with an eye towards investing in small and medium-sized Hispanic-owned businesses and assisting them to scale, the move to Miami was a natural fit. Aside from better climate and preferential tax treatment than New York, Angel identified that if he wanted to invest in Hispanic-owned businesses, he should be in the mecca of Hispanic entrepreneurship. Like Angel, cascades of family offices, private equity, and institutional investors are moving to Miami which should make access to capital and the opportunity to scale and innovate accelerate the growth of Hispanic entrepreneurship, job growth, and wealth creation.

The traditional capital flows to the U.S. from Latin America have not abated. As the unfortunate trend of instability and insecurity in Latin America continues, investors are incentivized to withdraw capital from the region and seek a safe haven in the U.S. Those investors have found traditional institutions like Goldman Sachs and J.P. Morgan to assist them with managing their money. However, investors have begun seeking alternate investments that generate higher yields with trusted advisors. This has given rise to various co-investment platforms and asset managers across the country.

For example, Camilo Nino co-founded Linkvest Capital as that co-investment platform to assist investors, initially from his native Colombia, to diversify their holdings and generate higher yields. Camilo is another example of the growth of the Hispanic entrepreneur supported by Latin American investors. Having been born and raised in Colombia but educated in the U.S., including earning an Owner/President Management degree from Harvard University, Camilo has leveraged his network serving as a trusted advisor to family offices in the region to provide them with a transparent model of allocating their funds into various real estate investment opportunities.

I foresee the acceleration and continued success of Hispanic entrepreneurs like Angel Morales and Camilo Nino in the coming years. This tide should lift all boats and establish the golden age of job growth and wealth creation for the Hispanic community in America.

DANIEL DIAZ LEYVA

IS THE CEO AND FOUNDER AT DIAZ LEYVA GROUP IN MIAMI, FL A WELL ESTABLISHED LAW FIRM WITH SPECIALTY IN CORPORATE AND REAL ESTATE PRACTICES.