In 2013, David Sanchez started his business, 10 Management, a Chicago-based, integrated talent management firm representing models, hair and makeup artists, photographers, and social media influencers. "I bootstrapped to start the business,” says David. “I saved about $30,000, and I did that through modeling before I started the company. I just self-funded it. I've always been self-sufficient.”
Bootstrapping through startup is common among today’s Latinx entrepreneurs: Nearly half of currently operating Latinx-owned businesses were started in the past six years, most relying on personal savings or funding support from friends and family.
While Latinx-owned businesses have undergone tremendous growth - one in four new US businesses are Latinx-owned, contributing over $700 billion in annual revenue to the economy - these businesses are starting faster, but staying smaller: Latinx-owned companies are twice as likely as white-owned employer firms to be microenterprises, or firms with $100,000 or less in annual revenues.
Latinx-owned businesses face significant hurdles in securing the capital needed to grow, according to a report published by Interise, the Federal Reserve Bank of New York, and Stanford Latino Entrepreneurship Initiative:
- They bear greater personal financial risk, related to lower credit scores and limited credit histories;
- face significant financial challenges due to the racial and ethnic wealth gap;
- and report a lack of financial knowledge and know-how.