"Making our Mark on the Internet"

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 years.

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 dream.

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 in revenue.

"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 money.

"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 and EarlyBirdCapital.

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 groups.

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 professionals.

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