Chicago.-The next big start-up could be in your own neighborhood, in your city or in your district. This is well known to Adela Cepeda, an expert and successful investor who for years has led public financing programs in Chicago and throughout the United States, and has now begun to launch her next idea: a fund of angel investors (Angeles Investment), specialized in supporting Latino companies and entrepreneurs.
A graduate from the University of Chicago, Adela agreed to tell Negocios Now some details about the creation of this fund, which already has the first 20 of the 50 founding investors that are expected to start this group of angel investors who will seek to find the next great Latino start-up, which will position itself as a competitor in the big leagues, along with companies like Google or Amazon.
Adela told us that as a woman and as a Latina, she has a great advantage to start ventures. “[We] Latinas are at the forefront of starting businesses. We are women trying to get ahead,” says Adela. “We come from a very business-minded culture and we want to have our own. Today much of the growth in the economy is due to businesses undertaken by Latinas. ”
Adela insisted that in order to get these businesses going, you have to consider the need for capital. “For these businesses to be really important, they must go beyond employing me and my family; in order to be bigger and more profitable, capital is needed. Sometimes that capital comes from contributions from families and friends, what is called “friends and family”; that is, I lend it to you, I lend it to my brother and so on – this way someone can raise the $50,000 they need to buy computers, rent a place, and hire an employee.
“We want to find the next Google or Amazon, with a Latino origin,” says Adela.
Technology is still a virgin market for Latino companies in the United States. There are some associations called “Angeles” (capital angels), and there are several in the United States but none of them are focused on Latinos; that is to say in businesses where there is at least one Latino as owner or management level. That’s where the idea of setting up a specialized fund for Latinos and with enough financial arm to promote major initiatives begun.
“We meet as investors and if we like the investment we gather more capital. We have formal meetings to bring together several entrepreneurs, study the record they have and decide if we are going to invest,” says Adela.
The founder of A.C. Advisory, a municipal consulting firm that later sold to PFM Financial Advisors LLC, emphasizes the importance of Latino entrepreneurs’ access to adequate initial financing that allows them to exploit their full potential.
“This concept isn’t new, but it is new to the Latino community. In general, Latinos do not have someone with a deep pocket in their families or friends who can help them invest in their businesses. Having relatively early capital is essential for exponential growth in the future,” he said.
Looking for angels
Currently, this Latina financial expert is in search of those angel investors willing to accept the challenge.
“The essential thing is that to become an investor in the group, you have to be accredited, and that has its definitions, and one has to be at that economic level to be able to be an investor in this type of business,” says Adela. “We want all the companies (in which we invest) to get ahead and contribute to generating lots of profit, but the reality is that many new businesses do not obtain significant revenue, and therefore, initially, they must be willing to wait for profits.”
Adela explains that these risks are part of the way the scheme is structured, but at the same time, she is sure that she is part of a team capable of minimizing them, by identifying the best options.
“New businesses are always at the risk of failing, so an investor must be willing to invest and not win,” says Adela. “We believe that the potential of the Latino market is great, that we are an experienced group and we will be able to identify those businesses that are going to get ahead and be able to invest in opportunities that will result in good profits.”
Adela says the selection is not easy. “It is not mandatory for contributors to invest in all projects, but we would like each investor to commit to contributing between $ 25,000 to $30,000 a year for small businesses,” she said. “The important thing is to choose well.”
“We have to identify those businesses that have potential and we have an administrative group that can do it, they can locate those products or services that are attractive here – or in the rest of the United States, or internationally. We are looking for the next Google or the next Amazon created by Latinos,” says Adela.
