Latino/a entrepreneurs continue to be a force for economic development in the United States: They own 4.7 million businesses that generate more than $800 billion annually. But they are not monolithic.

To better understand the complexities of Latino/a-owned businesses, the ninth annual State of Latino Entrepreneurship report from the Stanford Latino Entrepreneurship Initiative (SLEI) at Stanford Graduate School of Business analyzes these businesses through a multifaceted lens, uncovering nuances that are not apparent when studying Latino/a entrepreneurs as a group.

“We wanted to highlight that their experiences, challenges, and opportunities are deeply influenced by factors like their gender, their immigration status, and their tech engagements,” says Dr. Barbara Gomez-Aguinaga, associate director of SLEI. “Their differences are not just challenges. They can also be sources of strength and resilience – and even innovation.”

The report is based on a national survey of more than 10,000 business owners, about half Latino/a and half non-Hispanic white. The respondents’ companies generate at least $10,000 in annual revenue and have at least one employee in addition to the owner.

Overall, the survey found that Latino/a-owned businesses grew faster than white-owned businesses in revenue, number of businesses, employees, and payroll. From 2007 to 2021, the number of Latino/a-owned businesses in the United States rose 57%, compared with just 5% for white-owned businesses.

This year’s report focuses on three subgroups of Latino/a entrepreneurs: women, tech-centric firms, and immigrants.

Latina-owned enterprises grow in the face of challenges

The report highlights several successes for Latina-owned businesses in the U.S. Latinas own 104,000 employer businesses, making up more than a quarter of all Latino/a-owned firms with employees. White women, by comparison, own around one-fifth of white-owned businesses.

The research also points to challenges for Latina entrepreneurs. Some of these are similar to those faced by other women business owners: Women-owned employer businesses – both those owned by white women and Latinas – have substantially lower revenues, less profitability, and less cash in hand than businesses owned by men.

Latina entrepreneurs also face unique challenges at the crossroads of gender and ethnicity. One of these is access to financing: 17% of Latina business owners said access to credit or loans is a major challenge, compared with 9% of white women or Latino men and 7% of white men. Latina-owned businesses also face lower approval rates for business loans, receiving 39% of the requested amount from local and national banks.

In contrast, businesses owned by white women received 55% approval from local banks and 65% from national banks; businesses owned by white men received 60% approval from national banks and 67% from local banks.

Mari Borrero, CEO of American Abatement and Demo | SLEI

Mari Borrero, the CEO of American Abatement and Demo, discovered this challenge when she got a contract from the National Park Service but needed financing to do the work. She could not secure a traditional loan for the project and instead got help from another Latina entrepreneur – her mother. “I had to call my mom and ask for money,” Borrero told the report’s authors. “But it shouldn’t be like that. At this level, I should be able to finance a project like this.”

Tech-centric firms forge ahead

Latino/a-owned tech-centric businesses are at the forefront – both in terms of revenue growth and the implementation of cutting-edge technologies such as artificial intelligence.

Tech-centric firms – those that sell or develop technology products or services – generate about 60% more revenue than non-tech-centric firms – and median revenues for Latino/a- and white-owned tech-centric firms are about $400,000.

“This is something we haven’t seen in the past,” Gomez-Aguinaga said. “In general, Latino-owned businesses have smaller revenues, but this is not the case for tech-centric companies.”

These companies are also leveraging technology – for example, by moving faster than their white-owned counterparts to enhance their business operations with AI. The report found that 14% of Latino/a-owned businesses that generate $1 million or more in annual revenue are using AI, compared with 7% of comparable white-owned businesses.

Norma Padrón, CEO of EmpiricaLab | SLEI

Norma Padrón, the founder and CEO of EmpiricaLab, told the report’s authors that technology is a path to creating more equitable healthcare systems. Her company’s software focuses on training and knowledge transfer, enabling clients to use data more efficiently and spread learning within teams.

Padrón recalled a “huge gap in the market” related to data and employee education. “There’s already training software. That’s not the problem,” Padrón said. “The problem is that the training software isn’t delivering on the speed and fluidity of training that needs to happen.”

Latino/a-owned tech-centric businesses still face challenges, however, including liquidity, access to financing, and contracting hurdles. “Access to cash to cover business operations was a huge red flag,” Gomez-Aguinaga says. “Latino-owned tech companies are very successful in so many ways – but they probably don’t have enough capital to grow, and if something happens, they’re more likely to shut down because they have less cash in hand.”

Immigration trends show upward mobility

Immigrant entrepreneurs play an outsize role in the Latino/a entrepreneurship. “The majority of Latino-owned businesses are owned by foreign-born Latinos – 52%,” Gomez-Aguinaga says. “That’s a huge representation.” By comparison, only 7% of white-owned businesses are owned by immigrant entrepreneurs.

By several measures, Latino/a entrepreneurs saw more success the further removed they were from immigrant status. Median revenue for first-generation immigrant business owners was $270,000; it rose to $325,000 for those in the third generation or later. Similarly, members of later generations were more likely to receive government or corporate contracts, though they were still less likely to receive them than white-owned businesses.

Raul Lomeli-Azoubel, CEO of Welcome Tech | SLEI

Raul Lomeli-Azoubel is the CEO of Welcome Tech, whose product, SABEResPODER, connects Spanish-speaking immigrants with services and practical information about living in the U.S. The son of migrant farmworkers from Mexico, he said his U.S. citizenship has helped fuel the company’s growth.

“It’s not that my ideas are better. It’s just that my network enables me and my business partner to fund those ideas,” Lomeli-Azoubel said, noting that Welcome Tech would have “gone under many times” if it hadn’t been able to raise $75 million over the years. “Foreign-born [entrepreneurs] most likely haven’t had that network, so they need to bootstrap it, and they become more family-owned business.”

Lomeli-Azoubel said his experience has made him appreciate his privilege and his responsibility to his community. “I had a much different trajectory just because I happen to have a little paper that verifies that I was born in the U.S.”

The 2023 State of Latino Entrepreneurship report was produced by associate director Barbara Gomez-Aguinaga of the Stanford Latino Entrepreneurship Initiative. It was overseen by Stanford GSB faculty members George Foster and Jerry I. Porras. Porras is co-founder of the Latino Business Action Network. The SLEI research and education scaling programs are jointly supported by the Latino Business Action Network, the Stanford GSB Center for Entrepreneurial Studies, and Stanford GSB Executive Education.