U.S. Latino businesses continue to overcome financing challenges to pursue expansion and innovation through strategies such as international expansion, acquisitions, and investments in artificial intelligence. From 2017 to 2023, these businesses grew faster than white-owned businesses overall, accounting for more than 55% of all net new businesses in California and Florida.
“Latino businesses continue to drive net new business and job growth,” said Rosalia Chavez Zarate, associate director of the Stanford Graduate School of Management’s Stanford Latino Entrepreneurship Initiative (SLEI) and principal investigator of the 11th Annual Latino Entrepreneurship Report. She worked on the report, published in collaboration with the Latino Business Action Network, along with lead researcher Marlene Orozco, a research consultant at Stratified Insights, and José J. Alcocer, a research analyst at SLEI.
The report, released at the State of Latino Entrepreneurship (SOLE) Summit, which drew more than 1,000 attendees at Stanford GSB, is based on a survey of more than 10,000 Latino and white business owners with at least one paid employee and more than $10,000 in revenue. The findings show that Latino-owned businesses and the Latino population contribute to the larger economy.
“Latinos are the youngest and fastest-growing demographic in the United States,” says George Foster, professor of management at Stanford GSB and co-director of the SLEI faculty.
Introduction of AI, seeking funding
Latinx business owners are active in high-growth fields such as AI and fintech, and are entering these fields at similar rates as white business owners.
“Technology-focused Latinx companies tend to be younger and smaller, but they report profit margins comparable to white-owned companies, which tend to be larger and more mature,” Zarate says.
Latinx-owned and white-owned businesses reported implementing AI at similar rates. For both groups, the use of AI more than doubled between 2024 and 2025. Key uses of AI include marketing and content creation, data analysis, forecasting, customer service, and business intelligence. Both management groups also reported on monitoring risks and training staff to ensure responsible use of technology.
“Companies may still be experimenting, but there is more structured and responsible implementation,” Zarate said.
The growing demand for AI is also creating demand in construction, an industry that has historically been important to Latino businesses. Between 2017 and 2023, the number of Latino-owned construction businesses increased by 86%, while white-owned construction businesses increased by only 2%.
“There is an interface between technology and construction these days because there is a huge demand for physical infrastructure and data centers,” Foster says.
For the first time, this report uses a custom dataset to examine access to venture capital funding by Latino-owned businesses. The report found that Latino-owned businesses have been hit hard by a decline in venture capital funding since 2021, receiving less than 2% of all venture capital funding in 2025.
“A quarter of Latino-owned businesses are technology companies, so we wanted to understand what their economic journey is,” Orozco says.
The median deal size for venture-funded Latinx companies was $6 million, higher than the median deal size in the United States. Much of this funding was concentrated in late-stage companies. When markets are tight, investors tend to turn away from seed investments and toward trusted networks, which can disadvantage Latino startups.
“Latino-owned businesses face selective advancement, and once they’re in the pipeline, they can withstand the weight of it,” Orozco said.
Looking abroad and overcoming obstacles
Almost half of Latino-owned businesses operate internationally. These companies reported higher median profit margins than companies operating solely in the United States.
“Latino-owned businesses don’t necessarily wait until they get big before expanding overseas,” Zarate said. “Their cultural ties and family ties to their countries of origin support this international expansion.”
However, international expansion can pose complex issues, and there can be compounding effects if there are policy changes both in the U.S. and in other countries in which the company operates.
Latino-owned businesses face some of the same challenges as white-owned businesses, and some that are more acute for Latino-owned businesses.
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Tech-focused Latinx companies tend to be younger and smaller, but their profit margins are comparable to white-owned companies, which tend to be larger and more mature.
Author name
— Rosalia Chavez Zarate
Inflation was a top concern for both Latino and white entrepreneurs. Another commonly cited issue is government regulation, including taxes and duties. Latino-owned businesses cited recent changes to the Small Business Administration’s funding rules, including the imposition of new fees and changes to ownership qualifications.
While immigration enforcement was not a major concern, Latino-owned businesses, especially construction companies, cited it as a challenge more often than white-owned businesses (15% vs. 5%).
As noted in previous Latino Entrepreneurship Reports, access to capital remains a major barrier. Latino-owned businesses were more likely to apply from multiple sources and less likely to receive all requested funds for a loan. The biggest difference is for requests over $1 million.
“Latino-owned businesses face persistent funding gaps compared to white-owned businesses,” Zarate said. Latinx business owners are also more likely to report that there is no specific reason for a loan denial, making it more difficult to know how to succeed in future applications.
Despite these challenges, Latino-owned businesses remain resilient. This year’s survey asked about growth strategies and found that Latinx-owned businesses are more likely than white-owned businesses to be considering acquisitions (38% vs. 26%).
“We see this as a sign of strong strategic intent to scale, with a growth mindset and ambition,” Zarate says.
