Launching a new company can be daunting enough, but Latinx entrepreneurs often face added hurdles. Three members of our Multicultural Innovation Lab explain how they’ve forged a path to success.
Corey Beebe vividly recalls the moment he first realized that people in communities like the one he grew up in often acquire financial literacy the hard way. As a teenager, he and his family fled New Orleans along with thousands of other low- and middle-income residents in the wake of Hurricane Katrina. In the stressful months that followed, he never checked in on the small account he had recently opened with a large bank. When he did finally look, the monthly account fees that had added up shocked him.
That experience stuck with Beebe, and years later, when he met Karen Rios in a creative writing class at Columbia University, he discovered a kindred spirit. Rios grew up in Miami, the daughter of Nicaraguan immigrants, and saw firsthand the struggles new arrivals to this country typically face accessing traditional financial services. An academic who later worked as a Chief Compliance Officer at a hedge fund, she came to realize how little her background prepared her to successfully manage her own finances, despite what she had learned about investing on behalf of others.
The two became friends, and their discussions about their experiences eventually led to a Eureka moment: What if they created a digital platform for people in communities like the ones they had grown up in as a way to connect them to community banks all over the country?
“Karen had this idea around promoting greater access to community financial institutions, and I thought, OK, I see the utility in this, in keeping cash local and promoting financial stability in communities where something like a hurricane can affect everything about your life,” says Beebe. Adds Rios, “We thought that technology could help create financial inclusion at scale.”
The two launched their company, Lifesaver, in 2018. But they soon discovered that what Rios describes as “the stodgy banking industry” was not necessarily ready for their disruptive concept. “There was some skepticism,” says Beebe. “I think some investors thought we were just making a social justice play rather than pitching a viable business concept. I still believe that a big part of that was because we don’t look a certain way or we don’t have a certain pedigree. Someone once said, have you thought about hiring someone to sit with you on these calls?”
Rios recalls being asked in a meeting who she had voted for in a recent election, something she doubted a white founder would have been asked.
In the end, after lots of soul-searching and market research, Beebe and Rios took their basic concept—empowering people by investing in their communities—and transformed their company into what it is today: a mission-driven FinTech that lets people easily understand the societal impact of their spending. As Beebe sees it, it’s still about inspiring change at the local level, but it does so by allowing users to build an “economic ecosystem” through spending rather than through borrowing from community banks.
The idea has resonated with investors, and Beebe and Rios are using their time in Morgan Stanley’s Multicultural Innovation Lab, an accelerator program for technology and technology-enabled startups led by women and multicultural founders, to help them attract even more.
Despite the headwinds they encountered along the way, Beebe and Rios are among the lucky ones. Latinx-owned companies are the fastest growing demographic among all U.S. entrepreneurs. Nevertheless, new data says they have received only about 1% of all investments from the top 25 venture capital and private equity firms over the past decade.1 “Latinx VC funding is a blind spot, given so little is being channeled to this population,” says Ileana Musa, Co-Head of International Wealth Management and Head of International Banking and Lending at Morgan Stanley, who sees a significant opportunity in these numbers to mobilize one of the most entrepreneurial yet most undercapitalized growth populations in the U.S.
Even Latinx founders who don’t experience outright discrimination or bias deal with pressures finding access to that capital that white male founders might not. Just ask Danny Garcia, founder of the Playlister Club, a data-driven music-discovery platform and global marketplace that lets playlisters and music fans more easily find and curate new talent, while providing artists and labels with tools to increase their exposure and reach new fans.
Garcia grew up in South Florida, the son of Venezuelan immigrants, including a father who was a tech entrepreneur himself. A musician from a young age, Garcia played the guitar and formed various bands with his friends. Yet he was always frustrated when trying to find an audience for the music he made. “We’d record our music and throw it up on video-sharing platforms and get zero views, zero likes,” he says.
So he and four others, all of them Latinx, launched Playlister in 2019. While Garcia faced the same issues as other founders trying to raise money, he found the music industry to be relatively open to diverse-led startups. Still, he sometimes felt isolated, disconnected from other founders who shared his background with whom he could compare notes or discuss new ideas.
As a member of this year’s Multicultural Innovation Lab, Garcia has finally found that support network. “The weekly meetings with the team and the in-house entrepreneurs, where you can bring up any issues you may be facing, have been an extremely good resource and a great sounding board for me,” he says. His peers have been helpful as well. “We’ve gotten great advice from other founders who have already gone through the pain points that we are dealing with right now.”
Beyond the feedback, Garcia feels encouraged through the diversity of talent that surrounds him. “It’s really nice seeing representation from Latinx, African-American and women founders, considering the leaders in the tech space tend to be white males. The Lab lets me see there are opportunities for people who look like me.”