The 2022 Bain-LDC Report: Closing the Capital Gap – Fueling the Promise of Latino-Owned Businesses is a comprehensive examination of the challenges and opportunities facing Latino-owned businesses (LOBs) in the U.S. economy. This report, produced in collaboration between Bain & Company and the Latino Donor Collaborative (LDC), highlights the significant contributions of Latino entrepreneurs, who are responsible for approximately 50% of all net new small businesses created from 2007 to 2017. Despite their vital role in driving economic growth, LOBs face substantial barriers in accessing capital, which hinders their ability to scale and reach their full potential.
Key insights from the report reveal that while Latinos are more likely to start businesses compared to other demographic groups, they struggle with a “scale wall” around the $1 million revenue mark. This barrier is primarily due to the lack of equity investments and the high cost of debt, which limits their ability to reinvest cash flow into growth. The report underscores that less than 1% of investments from the top 25 venture capital and private equity firms go to Latino-owned businesses, despite LOBs growing revenue faster than their white-owned counterparts.
The report also identifies six distinct segments of LOBs, each with unique needs and challenges. It calls for equity investors, banks, and other financial institutions to create targeted products and strategies to address the specific funding needs of these segments. By closing the capital gap, LOBs have the potential to generate $1.4 trillion in additional revenue today and $3.3 trillion by 2030 if funded equitably.
Additionally, the report highlights the need for increased awareness and access to funding options for LOBs, as well as the importance of mentorship and education in helping Latino entrepreneurs navigate the complex financial landscape. The report concludes that addressing these challenges is not only a matter of fairness but also a significant business opportunity for investors and financial institutions.
To explore the detailed analysis and recommendations, download the full 2022 Bain-LDC Report: Closing the Capital Gap – Fueling the Promise of Latino-Owned Businesses from the Latino Donor Collaborative website. Join the effort to empower Latino entrepreneurs and unlock the full potential of their businesses.
