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A new report from the Latino Business Action Network (LBAN) and the Stanford Graduate School of Business highlights the growing impact of Latino entrepreneurs on the United States economy. According to the "2023 State of Latino Entrepreneurship Report," Latino immigrants play a crucial role, representing 14% of the country's total population and 32% of almost 64 million Latino residents. Latino immigrants show a notable inclination toward entrepreneurship, comprising 52% of all Latino-owned businesses, compared to only 7% of white-owned businesses that are immigrant-owned. This entrepreneurial spirit not only underscores the economic contribution of Latino immigrants but also highlights the need to understand and address the specific challenges they face in order to create a more inclusive ecosystem.
Challenges and Opportunities
Despite their determination, immigrant Latino entrepreneurs face greater financial challenges and operate less prosperous businesses compared to their U.S.-born counterparts. The report reveals that immigrant-owned businesses report median annual revenues of $270,000, about 20% less than native-born Latino businesses. Additionally, compound annual growth rates (CAGRs) between 2020 and 2023 were 8.4% for immigrants, compared to 10.1% for those born in the U.S. Despite these challenges, Latino immigrant businesses are showing some healthy financial indicators. They are slightly more likely to report profitability and have liquidity similar to that of U.S.-born owned businesses, reflecting remarkable resilience.
Sectoral Distribution and Market Access
The report also highlights significant differences in industrial distribution. Latino immigrant businesses are concentrated in accommodation and food services, construction, and professional/scientific/technical services sectors. In contrast, U.S.-born Latinos predominate in construction, administrative and support services, and professional/scientific/technical services. Additionally, Latino immigrants are less likely to participate in B2B (business-to-business) and B2G (business-to-government) markets, which could offer greater stability and growth. Only 28% of immigrant-owned businesses report B2B as their top customers, compared to 39% of U.S.-born Latino businesses. Accessing government and corporate contracts could be a decisive factor for many businesses, promoting scalability and economic resilience.
Success Stories: Raul Lomeli
An inspiring success story is that of Raul Lomeli, co-founder of Welcome Tech and its SABEResPODER product, which connects Spanish-speaking immigrants with practical services and information about life in the U.S. Born in August during the harvest season in California's San Joaquin Valley, Lomeli had the opportunity to obtain U.S. citizenship, a stroke of luck that would define his life. After studying at UCLA and working as a vice president at Wells Fargo, Lomeli co-founded Welcome Tech, initially conceived as a non-profit organization.
Its success with corporate sponsors led the organization to relaunch as a for-profit company in 2018. Lomeli has always felt a debt to his community and has worked to provide opportunities for those who resemble him. "I have always known my debt to my community and to society. So [my question has always been], 'How can I provide opportunities to the community that looks like me?'" said Lomeli.
Lomeli and his firm have defied trends by securing contracts with companies and governments, proving that the "American dream" is a communal dream for many immigrants. "In movies, the American dream is very individualized. It's 'me, me, me,'" Lomeli says. "The American dream for immigrants is a community dream. It's about, 'Okay, I made it. I need to bring my mom, my uncle, my brother.' That's why the American dream is even more beautiful, more robust, because of immigrants."
The 2023 State of Latino Entrepreneurship report highlights the resilience, entrepreneurship, and significant contributions of Latinos in the U.S., while emphasizing the need for ongoing, targeted support to overcome the unique challenges faced by immigrant entrepreneurs.
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