A growing number of groups – from the U.S. Hispanic Chamber of Commerce and the Latino Business Association to a New York state legislative task force – have begun focusing on programs to maximize Hispanic firms' access to capital markets. The Minority Business Roundtable also created a venture fund to bridge the capital gap with loans to finance the cost of raising capital. But more efforts are needed, roundtable members said.
"We have to change [the rules of the game] so they are more fair to entrepreneurs in the Hispanic community," said Antonio Flores, president and CEO of the Hispanic Association of Colleges and Universities.
"I would like to suggest that we need to think bigger about creating a critical mass of entrepreneurial class in our community. Perhaps a secondary school to connect college and beyond," said Antonio Flores, president and CEO, Hispanic Association of Colleges and Universities.
Roundtable members suggested a variety of strategies to help create conditions for a stronger capital-market channel to Hispanic enterprises. They include using growing political power to influence changes in public and regulatory policies, continuing to boost U.S. Hispanic educational levels to foster entrepreneurship and wealth-building, strengthening market networking and information; tapping public pension funds, and introducing financial innovations to allow banks to expand their reach.
Campaigns to boost the flow of information to lenders and Fortune 500 companies about the realities and opportunities for investment in the Hispanic market could be a key to unlocking the capital floodgates, said Winston Smith, director of supplier diversity for Microsoft Corp.
Microsoft, for example, has a program dedicated to providing loans to minority-owned banks. In turn, this allows the commercial lenders to generate more loans. "Get Hispanic CEOs in front of commercial banks, VCs, and sources of capital so equity financiers are aware," he said.
THE MCDONALD'S MODEL The franchising incubation process fostered by McDonald's Corp. offers a classic paradigm for successful Hispanic entrepreneurial development and insight into the long-term dynamics that boost middle-market growth.
As a franchiser, McDonald's Corp. has developed a business ecosystem that supports advancement opportunities for its entire network of U.S. Hispanic employees, owner-operators, and suppliers.
Thirty percent of the company's workers are Hispanic, and Hispanic consumers spend 25 percent more than general-market consumers at the fast-food giant's restaurants, accounting for about 17 percent of the company's $20 billion in cumulative annual sales from its 13,000 restaurants.
Today, 13 percent of the company's officers and top executives in the United States are Hispanic, and McDonald's has 183 Hispanic owner-operators covering 760 restaurants that had cumulative annual sales of $1.3 billion. In addition, McDonald's Corp.'s U.S. purchases from Hispanic suppliers grew more than 20 percent last year, to more than $3 billion, said Ralph Alvarez, chief operations officer, McDonald's USA.
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