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Closing the bias gap in VC funding

Yahoo Finance's Akiko Fujita and Ines Ferre discuss the challenges Latinos face in the venture capital (VC) world.

Video Transcript

AKIKO FUJITA: When it comes to venture capital funding, Latino women are raising more money than ever before. Capital raised by Latina-founded startups totaled more than a billion dollars between 2018 and 2019. But that only accounted for 0.3% of total venture money that was allocated. Our very own Ines Ferre has been taking a deeper dive into this disparity. And Ines, I know you've been speaking to a number of women, female Latina VCs. What are they telling you about the challenges that they face?

INES FERRE: Well, they're saying that it's incredibly hard to start a VC firm. There's a huge hurdle of getting that first time round of funding, operating on a no income basis. And Latinos are still climbing up that generational wealth ladder, so to speak. There's also this challenge of bias, challenge of the unknown, which has kind of plagued the VC world for some time now.

I spoke to Noramay Cadena. She's a co-founder of Supply Change Capital. It's a company which invests in food brands and cultural foods. And she said that the VC world, as a Latina, can be lonely, inspiring, and empowering, all at the same time. Take a listen.

NORAMAY CADENA: It is also a lonely place, Ines, because Latinos, as a whole, manage only about 1% of assets under management in venture capital. It's a tiny number. And when I started in venture in 2015, there were less than 10 Latinas at the partner level in the country. And so, it-- incredibly lonely.

INES FERRE: Wow.

NORAMAY CADENA: There are now probably twice as many. And some of them are really raising the bar, raising funds two and three, crossing the $100 million threshold. And so it's an exciting time. I'd say there's truly a revolution happening on both ends of the table in terms of who gets funded and who is allocating the capital in venture. So it's an exciting time for Latinos in VC.

INES FERRE: And that's really her point, is that the tide is turning, especially as more Latinas go into the VC world and can prove that this can be done successfully and see returns. You're going to be seeing more and more Latinas entering this-- the VC world.

AKIKO FUJITA: And Ines, when you talk about Latina VC-led funds, what specifically in your conversations did you find they are focused on? Where are they really seeing the opportunities to invest?

INES FERRE: Well, they're seeing it in minority entrepreneurs and immigrant entrepreneurs, investing in thematic segments, so to speak, these demographics in the US that may be underserved. Cadena's own firm is investing in multicultural foods and consumers that are multicultural. Just for example, like the Chobani brand made Greek yogurt popular here in the US. They're looking to do something similar with cultural foods from other countries here in the US.

AKIKO FUJITA: Yeah, the challenge is always really getting that pipeline going because once it does, we see the impact on these startups as well. Ines Ferre, thanks so much for bringing us that story.