More Latinos follow tech dream
By Agustina Guerrero
Tribune staff reporter
Published September 24, 2001
Caroline Sanchez Crozier came to the United States in 1967 and became the
first in her family to earn a college degree.
She also runs one of the area's oldest Latino-owned technology companies,
having founded Chicago-based CS&C Inc. in 1988. The firm specializes in
instructional technology and has averaged $3 million in sales for the last 10
For Sanchez Crozier, it has been "the American dream come true," but for many
Latinos trying to start a technology company, visions of success are still just a
Mario Araujo knows how hard it can be to start a company. He launched
AztecaNet, an Internet service provider, five years ago in Los Angeles. The
service is now offered in other major cities, including Chicago, and has $1 million
"It is very hard for Latinos because we don't have a lot of capital, and it is hard to
get money from banks," Araujo said. "The way we do business is very
conservative. We operate on a cash basis, we grow very slowly."
Another problem: Araujo's cash model is not very attractive to venture capital
firms looking to invest in a minority-owned company.
While Araujo's firm is still growing, many Hispanic information technology
companies have failed before taking off, said Jesse Ruiz, a corporate lawyer with
Gardner Carton and Douglas, based in Chicago.
"Latino entrepreneurs have more difficult times in convincing [venture capital]
firms because [venture capitalists] trust the people they know. So chances are
that people who play golf with investors get the money. It is difficult for Hispanics
to get the seed capital to get off the ground," he said.
Also, local Latino companies face the same fate as many start-up Chicago tech
firms when it comes to funding.
"There is more capital available on the coasts than here in the Midwest," said
Marty Castro, a lawyer at Chicago's Castro, Gomez, Durbin and De Jesus LLC.
"We need government leadership to change this.
The U.S. Hispanic Chamber of Commerce is trying to help. The chamber has
created a fund to provide venture capital and equity to Latino companies.
The fund has already received a commitment from Verizon Communications and
Bank One, and is expected to raise upwards of $100 million by the end of this
year, said George Herrera, president and chief executive of the chamber.
"It's a fund for emerging companies with at least three years in business," he
said. "We will focus on companies related to telecommunications, information
technology, media, education and hospitality services."
For Fernando Leal, founder of Chicago-based WynWyn, it wasn't so hard to get
"If you have a good plan and you are perseverant you will get the capital," he
said. "Over the last four years I raised $20 million for my company, based on
business fundamentals and perseverance.
WynWyn sells databases with local commerce information, and has received
money from investors including New York-based Wheatley Partners, BlueVector
Nevertheless, a recent study by the Tomas Rivera Policy Institute, in Claremont,
Calif., concluded that many Latino businesses are undercapitalized.
"The lack of capital is not only in the financial side but in the human resources
side as well," said Waldo Lopez, the institute's director of economic policy
research. Compared with the general population, "Latino-owned companies have
the lowest amount of capital to start," and their personnel have completed the
least amount of schooling, according to the study.
There are about 35 million Latinos in the United States. The 500 biggest Hispanic
companies in the nation generated $21.18 billion in revenue in 2000 compared
with $10 billion in 1991, based on data provided by Hispanic Business magazine.
Juan Soto, founder of Chicago-based PC Experts, thinks there could be more
Latino IT companies in the Chicago area if more Hispanics had the right
technology education. "You need computing communications skills to start a
business like this," he said.
He started his own company in 1994 in response to an expanding demand for
computer software development and integration.
Like Soto, AztecaNet's Araujo said education is a critical problem. When he
graduated from San Diego State University with a computer science degree 20
years ago, he was the only Latino. That's why he thinks it is hard to find Hispanic
professionals starting tech firms.
But the chamber's Herrera has a different view. For him, the Hispanic community
is already well-prepared and represented in the IT arena.
"Our entrepreneurs have the managerial, financial and technical skills. There are
a lot of major IT companies owned by Hispanics nationwide. Some Hispanic IT
companies are already generating $2 billion or $3 billion a year. But a lot of them
are secret, they are not known countrywide," he said.
One of them is TDF Corp., a Naperville firm that offers a wide range of IT solutions
to U.S. government agencies, including the Army. Founded in 1989, TDF now
employs more than 100 tech professionals.
"There is tremendous competition in this area, but we found our niche in the
federal government. They have quotas for minorities and we are 100 percent
Latino-owned," said Claudia Fabela, TDF's president and founder.
Other Latino entrepreneurs say Hispanics will not be well-represented in the IT
field until the Latino business community can work together like other minority
African-Americans, for instance, have leaders like Jesse Jackson, said Bennett
Santana, founder of Business Systems of America, a Chicago company
specializing in IT staffing. "He can pick up the phone and get an appointment with
the president," Santana said. "There is no one that can do that for Hispanics. We
lack a central figure or organization to unite us."
The dearth of Latinos pursuing technology as a career leads to fewer IT
professionals, resulting in few entrepreneurs, said Sanchez Crozier.
She has sought a Latino IT professionals organization locally that can connect to
a national base, but she has yet to identify one in Chicago. She has considered
forming a group, but her time is limited.
"We need one organization that can eventually reach the caliber of the Black
Data Processing Association," she said.
That association provides professional development programs and services to
members. Founded in 1975 in Philadelphia, it now has more than 40 active
chapters across the United States and 2,500 members, including students,
educators, vendor representatives, entrepreneurs and information technology
One organization aimed at helping Latino entrepreneurs raise capital is the Latino
Initiatives for the Next Century. The Chicago-based non-profit organization
provides economic assistance and equity to Latinos throughout the United
States. It has recently launched a fund called Millennium LMI LP to make equity
investments in minority companies.
Copyright © 2001, Chicago Tribune