Latino education entrepreneurs are underrepresented in the portfolios of education investors, according to a new report, which argues that venture capitalists, community organizations, and professional organizations can take steps to bridge that gap.
The report, released by the NewSchools Venture Fund, which invests in education companies, points to a number of factors that undermine Latino-led companies’ ability to secure investment and scale-up.
Many Latino entrepreneurs are inspired to build education businesses because they want to give back to their communities. Yet qualitative and quantitative surveys conducted for the report also found that Latino entrepreneurs are more likely to shoulder personal responsibilities, such as having a part-time or full-time job outside of their entrepreneurial ventures, leaving little time to focus on developing a new business.
The qualitative surveys were conducted with over 110 Latino education entrepreneurs in communities with the highest concentrations of Latino leaders, and the quantitative surveys were conducted with 340 Latino education entrepreneurs.
Frances Messano, senior managing partner at the NewSchools Venture Fund and author of the report, said in the introduction to the analysis that Latinos have the highest rate of entrepreneurship of any demographic across all industries, but they are underrepresented in education funders’ applicant pools and investments.
Messano said she wanted to understand why Latino education entrepreneurs were underrepresented in NewSchools portfolio, and in funders’ portfolios, overall. The report examined the impact that entrepreneurs’ backgrounds have on their ability to secure funding, as well as whether funders’ approaches to looking for promising companies to invest in might be hurting the chances of Latino business leaders.
Many Latino education entrepreneurs are young women juggling family duties, the report says. In some cases, they’ve come from immigrant backgrounds and where their parents launched businesses with the goal of supporting their family. Those backgrounds can instill strong entrepreneurial qualities in fledgling business leaders, the report says.
“The overarching feeling among Latino entrepreneurs is that their parents sacrificed to give them an education and life opportunities,” said the report. “They feel a deep sense of duty to ‘give back’ and make the most of those opportunities.”
Unfamiliar With Funders
Some Latino entrepreneurs are also reluctant to seek out private investment, believing they must self-fund their projects and avoid debt, according to the NewSchools research. Those beliefs, combined with limited information on funding, make Latino education entrepreneurs less likely to pursue grant opportunities.
In fact, less than 50 percent of those who participated in surveys, included as part of the research for the report, said they were familiar with the top 10 education funders, Messano discovered. “If you don’t even know where to turn, if you don’t even know where you can do some research, or what questions to ask,” Messano said, you’re “starting behind.”
Messano urged funders to take several steps to help Latino entrepreneurs. They should make their funding processes more transparent, and provide meaningful feedback to the founders of businesses whose applications they reject. They should also make themselves available to Latino entrepreneurs as coaches, and for networking.
There are broad benefits for bringing more Latinos into the world of education entrepreneurship, Luis Avila, founding president of Iconico, a research firm, and contributing researcher to the project, said in an interview. Education companies that don’t have a strong understanding of the needs of the Latino community aren’t likely to develop products that are responsive to the needs of students from those backgrounds, Avila explained. That’s particularly true in school districts with growing Spanish-speaking populations, he said.
“If we want to be a prosperous and dynamic and vibrant society in the future, we’re going to have to make sure the right people are at the table to find the solution for the communities they represent,” said Avila.
Correction: An earlier version of this post misspelled the name of the senior managing partner at the NewSchools Venture Fund, Frances Messano.