Investing with Impact

Israel Muñoz breaks down the systemic barriers that have long held back Hispanic entrepreneurs—and explains what Angeles Investors is doing to address those gaps

It’s no secret that venture capital (VC) and angel investing spaces are dominated by white men—and that those men tend to invest in other white male founders.

While Hispanic and Latinx people lead the US in entrepreneurship (see Stanford’s State of Latino Entrepreneurship and the Kauffman Foundation’s Indicators of Entrepreneurship), that has not translated into access to capital for our entrepreneurs. In fact, less than 2 percent of VC-backed companies are Latinx, while Latinas have only ever received just 0.4 percent of all venture capital investments.

The reasons behind this disparity are many. They range from extreme competition for venture capital to institutionalized racism against Hispanics and Latinx people in this country. On top of that, few of us have access to “friends and family” capable of providing the capital necessary for launching a business idea. In fact, many of us who are first-generation don’t have families who can even provide a safety net—rather, it’s up to us to work hard, climb the economic ladder, and become the safety net ourselves.

All-in-all, the status quo is unfavorable to Hispanic and Latinx founders. Angeles Investors exists to challenge that status quo and support Hispanic and Latinx entrepreneurs across the country with our community’s own capital.

From the Conference Room to the National Stage

Angeles Investors began with a single pitch night in September 2019. Hosted at one of Chicago’s WeWork locations, a group of Hispanic and Latinx angel investors and venture capitalists gathered at a small executive table in a small conference room. Those of us who were meeting for the first time introduced ourselves and shared quick stories of how we knew others in the room. All of us were there for the same reason: to listen to pitches from three start-ups with Hispanic and Latinx founders or cofounders.

First up was Resonado, a company that is redefining speaker technology. Second was Popwallet, a marketing platform for mobile wallets, and finally there was Hallow, a guided prayer and meditation app for Catholics. Following the pitches and a dinner, two of the three founders walked away with money to back their vision.

The following November, we hosted another informal pitch night—this time, with a few more investors in the room. Again, three start-ups pitched the investors, a dinner was shared, and a Latina founder walked away with a new group of backers.

“Supporting Hispanic and Latinx entrepreneurs isn’t just the right thing to do—it’s what makes sense as investors.”

We knew there were many more Hispanic and Latinx angel investors out there, as well as start-up founders with an immense need for capital. Creating an angel group to bridge these two groups seemed like the next step, so we got to work and launched Angeles Investors in January 2020.

What started in a small conference room is quickly growing into a national angel investor network. To date, we’ve met dozens of incredible, vastly underestimated founders. We’ve grown our investment portfolio to five companies, and we’ve increased membership to nearly forty investors, encompassing some of the top business talent nationwide—which happens to be Hispanic and Latinx.

Magnifying Angels, Magnifying Community

The past two decades have led to an explosion of angel investing and angel investor networks, with their investment power now reaching up to $24 billion annually. Angel networks often have tailored investment theses. For instance, some only invest in regional start-ups, such as Tech Coast Angels in Southern California; others only invest in women and femme-led companies, such as Pipeline Angels.

 Angel groups with every investment thesis imaginable exist—and yet, until recently, there was no angel investor group dedicated to investing in Hispanic- and Latinx-founded start-ups. We believe that establishing our own angel investor network is imperative to finding, funding, and growing promising Hispanic- and Latinx-founded start-ups—while also fostering our first generation of angel investors.

Today, Hispanic and Latinx angel investors represent a small fraction of all angels (2.3 percent, to be exact). To magnify the impact on our community, we need to educate and empower more Latinos to become angel investors.

While vast racial wealth and income inequality still exists, the past twenty years have seen the Hispanic community make substantial economic gains. We’ve become drivers of the US GDP, we lead in entrepreneurship rates, and we continue climbing the corporate ladder. This has led to substantial gains in our community’s wealth and income: the Latino Donor Collaborative found that from 2005 to 2015, the percentage of Latino households making over $200,000 or more in income has grown by 187 percent.

There has never been a better time to create Angeles Investors, and we are confident that our efforts will drive strong returns and wealth creation. Indeed, research from the Kauffman Foundation found that start-ups with ethnically diverse teams produce over 30 percent higher returns compared to start-ups with all white founders.

Supporting Hispanic and Latinx entrepreneurs isn’t just the right thing to do—it’s what makes sense as investors.

To the future!

The First Five

Angeles Investors has invested in five companies to date, including:

Agtools, a real-time market intelligence platform for agricultural supply chains

pValue Inc., a marketplace for creating high-quality certification exams

Reel, a digital platform for debt-free shopping, helping consumers easily save-to-buy

Hallow, digital platform for Catholic guided prayer and meditation

Popwallet, an automated marketing platform for mobile wallets, helping companies reach customers and develop brand loyalty

Israel Munoz
Photo by Jaclyn Gaughan

 

Israel Muñoz was born and raised in Chicago’s South Side by immigrant parents from Mexico. He is a graduate of Fordham University, a former Fulbright scholar, and currently an investment analyst with the Illinois State Treasurer. He helps lead Angeles Investors and is passionate about supporting Latinx entrepreneurs and inclusive economic growth.