01/28/2022
▹Latinos are a growing, youthful, and highly productive cohort that will drive future US economic and population growth—and Latino-owned businesses (LOBs) are an overlooked investment opportunity.
▹Despite their enormous importance to the economy, LOBs are underfunded across all sources of capital.
▹This is a clear opportunity for equity investors and LOBs. LOBs need equity investment so that they can direct cash flow to growth. Angels, venture capital, private equity, and other equity sources can serve this unmet need with an expectation of high returns.
▹LOBs appear to struggle with a “scale wall” at around $1 million in revenue, at which point high-cost debt and a lack of equity investments may pose significant challenges in reinvesting cash to scale.
▹LOBs are not monolithic: Six distinct segments need equitable evaluations, new products, and enhanced awareness of funding options, offering opportunities for institutional investors of all types.
Source — Closing the Capital Gap: Fueling the Promise of Latino-owned Businesses
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