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Friends in High Places

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The newly formed Hispanic Network of Entrepreneurs hopes to create more of its own kind in Silicon Valley.

Hispanic entrepreneurs now have an influential friend in the highly competitive and lucrative world known as Silicon Valley.

The Hispanic Network of Entrepreneurs (Hispanic-Net), formed earlier this year, is the brainchild of three high-level Hispanic executives, all entrepreneurs and Silicon Valley veterans who have blazed trails in the high-tech, Internet, and software industries. They hope to tap the collective wisdom of Hispanic executives throughout Silicon Valley to ease the way for a new generation of Hispanic entrepreneurs entering the field.

“We’re not geared toward finding jobs for people. We’re geared toward putting Hispanics in the mainstream of the high-tech business world,” says Richard L. Leza, president of Hispanic-Net and president and chief executive officer of AI Research Corp., a Palo Alto, California, venture capital firm.

“We’re forming an organization of highly experienced, highly qualified Hispanics involved in the high-tech, Internet, and software industry. There are a lot of Hispanics in the mom-and-pop kind of stores, but that’s not where the high growth is.”

High-growth companies are abundant in Silicon Valley, an entrepreneurial hotbed with a highly educated, culturally diverse, and, in many cases, outrageously wealthy populace that seems to take pleasure in helping businesses succeed.

That doesn’t mean it’s easy for an entrepreneur to turn an idea into a successful product, however. Competition is fierce, says Reynaldo Gil, chairman and chief technology officer for WorldChain Inc., a software company based in Fremont, California. He says that getting a foot in the door has more to do with who you know than what you know.

“Trying to break into the venture capital world is tough unless you have connections,” he says. “Trying to get WorldChain funded was tough. I had to overcome a lot of barriers.

“What we lack in the Hispanic high-tech industry is a network for business development and getting venture capital financing, but also recruiting and exchanging ideas and nurturing entrepreneurship. Our goal is to nurture the high-tech Hispanic entrepreneurial community,” he says. “We believe we can foster success by mentoring and using our network to push people up the ladder.”

That also happens to be the governing principle of the Silicon Valley Project, which was organized two years ago by the Rev. Jesse Jackson’s Rainbow/PUSH Coalition. Similarly geared toward increasing minority participation in the digital economy, that group held its second annual conference in San Jose, California, in April (see “Working to Close the Digital Divide,” Market Watch, June).

Mr. Leza points out that while Hispanic-Net and the Silicon Valley Project share ideals, they differ in two fundamental ways. Hispanic-Net has a business orientation, as opposed to a political one, and its focus is helping entrepreneurs make business deals rather than securing jobs and increasing contracts for minority-owned firms, he says.

According to Mr. Leza, Hispanic participation in venture capital firms has changed little since he graduated from college in 1978. At that time, almost all general partners in the upper-tier venture capital firms were Anglo males. Now, more than 20 years later, Anglo women account for 15 percent of such partners, Asians 5 percent, African Americans 1 percent, and – regrettably, to Mr. Leza and others – Hispanics just one-half of 1 percent, according a widely quoted San Francisco Chronicle survey.

In terms of minority representation in the high-tech sector generally, the Silicon Valley Project offers another bleak assessment. Of 356 board members at the 44 Silicon Valley–based high-tech companies in which Rainbow/PUSH owns stock, just 35 are women, 19 are Asian American, six are African American, and three are Hispanic.

Mr. Gil believes Hispanic-Net not only can provide inspiration and deal-making opportunities for members, but also will help up-and-comers with practical matters such as whom to go to for legal advice or whom to turn to for help with finances.

“When you’re starting a company there are a tremendous number of things you need to know that are not taught in business school and are not taught in large companies,” he says. “We want to be able to leverage our collective experience to help the industry grow.”

Hispanic-Net is patterned after another Silicon Valley affinity group that has enjoyed considerable success since it was formed nine years ago. The IndUS Entrepreneurs (TiE) – named for the Indus River region, which spawned one of the world’s earliest civilizations – is an organization for Silicon Valley professionals from India, Pakistan, Bangladesh, Nepal, and Sri Lanka.

Raj Desai, executive director of the group, says TiE now has 6,000 members in 25 chapters worldwide, with another 15 chapters in the making. The group was formed to help immigrants from the Indus region break into the venture capital and entrepreneurial networks crucial to success in Silicon Valley, he says.

Membership is open to anyone, and the group’s influence has grown to such a degree that TiE regularly attracts high-powered speakers to its annual meetings, including the CEOs of Hewlett-Packard and Cisco Systems.

Hispanic-Net now boasts approximately 30 charter members and 20 associate members. Charter membership is limited to Hispanics in the high-tech industry who serve as executives at the C-level, meaning positions such as chief operating officer, chief executive officer, vice-president, or chief technology officer. Associate membership is open to anyone and costs $200 per year.

Mr. Leza says the group hopes to have at least 50 charter members and 100 associate members by the end of the year. He says Hispanics in the high-tech industry in Los Angeles, Chicago, Miami, and New York have expressed interest in starting chapters in those cities.

In addition to Messrs. Leza and Gil, charter members include Roberto Medrano, general manager of Hewlett-Packard security products; George Bolanos, CEO of Wanadu Interactive Inc., of Mountain View, California; Manuel Murillo, chairman and chief operating officer for EmiBanc in San Francisco; and Andres M. Gutierrez, managing director for NewCo Productions, a Fremont, California, venture services company.

Mr. Gutierrez, who founded his company in October 2000, says Mr. Leza originally had a hard time finding other Hispanics to start the group.

“Only recently have there been enough of us in positions in the executive levels in the technical field to actually get together and form an organization like this,” Mr. Gutierrez says. “This is an opportunity to be a role model and say, ‘It’s possible, and this is the future for Hispanics as well as anyone else.’ ”

Succeeding in Silicon Valley, however, means tapping into the network that links entrepreneurs with venture capitalists and large corporations looking for new revenue sources.

“The [venture capital companies] operate by networking a trusted resource who refers entrepreneurs or ideas to them,” says Mr. Gutierrez. “The fact that I don’t see many Hispanics participating in Silicon Valley is one of the reasons Hispanic-Net exists.”

Mr. Leza and other charter members say they’re tired of reading high-tech publications listing the 50 most influential Chinese entrepreneurs or the 50 most influential Indian entrepreneurs. “How many times have we had the 50 most influential Hispanics in the United States?” Mr. Leza asks. “None, so far.”

Mr. Gil remembers an article last year highlighting successful immigrants in Silicon Valley. Chinese and Indian immigrants were portrayed as high-tech entrepreneurs, while Hispanic entrepreneurs featured in the article tended more toward the service industry.

“That really infuriated me because there are a lot of successful Hispanics in the high-tech industry, but the press is blind to that,” he says. “The press keeps perpetuating the stereotype of Hispanic entrepreneurs in the service industry.”

Mr. Leza says Hispanic-Net will concentrate on five central goals. First, the group wants to encourage entrepreneurship among Hispanics in high-growth industries such as high-tech, the Internet, and software. The second objective is to promote relationships that will lead to business deals. Hispanic-Net already has helped members make a connection with high-tech giant Hewlett-Packard through Mr. Medrano.

Opening doors to large corporations is another group objective, says Mr. Leza, who believes Hispanic-Net will get more attention from such companies as the group grows, in the way TiE has.

Hispanic-Net also hopes to extend its membership to the mainstream business world and promote investments in start-up ventures involving charter and associate members.

Making contacts is what it’s all about, Mr. Leza says, and Hispanics in Silicon Valley and other high-tech venues are missing out because they lack them.

“A lot of the jobs for key positions go basically from contacts,” Mr. Leza says. “And if you don’t have the contacts, you don’t know the opportunity is there, or you don’t get the chance to get a C-level job with a high-growth company.”

And that’s where an influential friend like Hispanic-Net can come in handy.

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