Latino-led venture capital firms drive job creation: Over 50,000 jobs generated in 2023, says SomosVC

NEW YORK CITY - Investments from Latino-led venture capital firms contributed to the creation of more than 50,000 jobs last year, Axios reports.

The data comes from a recently published study by SomosVC, a non-profit organization that focuses on Latino venture capital investors. The study looked at a database of active Latino investment professionals at U.S. venture capital firms with a fund size of at least $5 million.

Figures showed that these Latino-led firms helped create approximately 51,600 jobs in 2023. But despite these gains, representation still remains a top concern for researchers.

According to the analysis, Latino investors represent only 1.6% of investment professionals at venture firms with about $100 million in assets.

Similarly, the majority (almost 80%) of funds over $100 million in assets have zero Latino investors. Although this represents some progress compared to years prior, most funds have yet to add Latino representation to their teams, according to SomosVC.

At the same time, out of more than 560 large firms analyzed in the report, only 26 employ more than one Latino investor.

The organization argues that the job creation estimate speaks to the Latino community's impact despite its low VC representation.

Latinos are blazing trails, says Mariela Salas, the executive director of SomosVC, because diverse investors are more likely to support founders and start-ups from underrepresented communities.

"Part of our community's entrepreneurial spirit comes from having a different lens, making us open to exploring paths and exploring opportunities that would otherwise be overlooked," Salas says.

As a remedy for these low representation levels, groups like SomosVC have fellowships to increase the demographic's presence in the tech industry and mentorships to foster retention.

"Ultimately what we want to do is increase the assets under management for everyone," Salas says, referring to hopes of making the 1.6% figure grow."

This report comes as another side of the job market, namely small businesses, have become a hub for Latino employment and entrepreneurial activities.

A recent report by The Wall Street Journal showed that Latin American immigrants are starting businesses at more than twice the rate of the U.S. population as a whole.

The jump in Latino entrepreneurship levels has driven up the overall share of new businesses owned by immigrants, who accounted for 36% of launches last year compared with 25% in 2019, the report showed. By comparison, new business creation by white and native-born Americans has slowed in the past two years, following a broad surge early in the pandemic.

In some cases, entrepreneurship is an outstanding option for immigrants, particularly undocumented ones, since it doesn't require work authorization or a Social Security number. For others, it's a matter of necessity, as limited proficiency in English and lack of American credentials can make it increasingly difficult to find a job.