Many Hispanic entrepreneurs come up with a great idea for a new business venture but find it challenging to get started. Some may consult with family and friends instead of with business experts who could help them achieve their goals.
But there's one route that not nearly enough Hispanic entrepreneurs are considering, and that's getting assistance from business incubators. In case you're wondering what business incubators are, the International Business Innovation Association defines them as companies that help new businesses develop by providing a wide array of services, which include office space, mentoring, funding advice, and management training. Business incubators can be non-profit organizations, academic institutions, venture capital companies, and even public-private partnerships.
Incubators Provide a Good Foundation
"Ideas need to get funded," says Isabel Casillas Guzmán, director of the Office of Small Business Advocate at the Governor's Office of Business and Economic Development in California. She believes that even though Hispanic business founders are emerging at higher rates than other groups, "they're still challenged with lack of resources to propel them." According to Casillas Guzmán, it's vital "to make sure that they have equal and equitable access to resources."
She goes on to explain that awareness within the Latino community remains a challenge in how to connect with the right advisors and resources. Her office recently established an entrepreneur task force to assist businesses and would-be entrepreneurs in the state, which has the largest number of Latino small businesses in the country and continues to grow. "So if your family and friends don't include a recent startup founder who just sold their business for millions, then your network is limited," she says.
That's where an incubator comes in. They're different from the U.S. Small Business Administration's Small Business Development Centers across the country in that an incubator takes on a select number of clients or business ventures. In many cases, the incubators partner with the SBA in a type of "one-stop" shopping for entrepreneurs. The key, say Latino business owners, is to make yourself known out there.
Finding a Business Incubator
"Many Latinos lack the natural networks to find the incubators, so you need to get out there and make connections," says entrepreneur Luis Vásquez-Ajmac, a marketing and media consultant who has started small businesses on both coasts of the U.S. "Check with the local chamber of commerce, a local non-profit organization, even a university. An incubator helps to set your foundation and accelerate your growth faster than on your own. Everything is better doing it with a group than on your own."
Joining an incubator can be a daunting undertaking, with a sometimes lengthy and competitive application process and a time commitment that could range from one to two years. But for the right entrepreneur, it's worth it. Vásquez-Ajmac recalls the early days of starting his first business out of his home and panicking when clients wanted to meet. "I didn't have an office; I couldn't tell them [to] come meet me at home." An incubator helps professionalize you, says Vásquez-Ajmac, who is currently working on a free app for cycling enthusiasts.
One of the disadvantages of business incubators, besides the lengthy application process, is that Hispanic entrepreneurs receive smaller investments on average compared to other groups, as reported in a recent Morgan Stanley study. Even those Hispanic entrepreneurs who make a concerted effort to get connected to incubators and investors find that to be the case. And a less diverse firm is likely to have a less diverse pool of potential entrepreneurs. Outreach to entrepreneurs, the study finds, relies on a manager's network and if that network isn't diverse, then Latino entrepreneurs get shut out.
Hispanic Incubators Are Increasing in Numbers
Fortunately, there are a growing number of Hispanic incubators nationwide that not only want to see the number of Hispanic businesses grow and prosper but make a concerted effort to seek out Latino entrepreneurs and members from other diverse communities. It simply makes good business sense when one considers that the growth of Latino-owned businesses is outpacing all others, these incubators say.
In New Mexico, EmprendeLatino partners with a venture capital firm to provide funding, mentorship, and other resources to Latino entrepreneurs; Manos, in California, offers a 12-week mentorship and investor introduction program. And the Illinois Hispanic Chamber of Commerce partnered with 1871, an incubator in Chicago housing nearly 500 startups, and created the Hispanic Technology Incubator, which started with 12 Latino-owned ventures and has doubled since launching three years ago. The Pittsburgh Hispanic Development Corporation operates the PHDC Business Incubator, a co-working space with a wide range of services to Latino entrepreneurs, from web design to business mentoring, and even providing help with loan applications. Similar programs also exist in Michigan, Nebraska, Oregon, and Maryland, to name just a few.
"The good news is that you're seeing more and more of them [Hispanic incubators] in places where you normally wouldn't think they'd be, and that's good for the economic success of Latino businesses nationwide," says Vásquez-Ajmac.