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Even as the Latino middle class grows, the wealth gap persists. A typical white family has five times more wealth than Latinos. Suma was founded nine months ago by CEO Beatriz Acevedo with the goal of bridging the Latinos wealth gap.
A seasoned tech entrepreneur who founded Latino-focused entertainment company Mitú, which was acquired last year by GoDigital Media Group owner of Latido Networks for an undisclosed amount. Mitú had raised $52 million, but struggled especially during the pandemic. She also runs her family's California charity, the Acevedo Foundation.
Acevedo, who was born in Tijuana and has called herself "a proud border girl," wanted to build an app that helped a new generation plan their financial future.
Suma combines several tools in its "dinero toolkit" to help Latinos manage their money including savings goal trackers and tips and calculators to help people rent or buy a home and pay off credit card debt.
Acevedo said Latinos from many countries have struggled to maintain wealth or learn about money because of unpredictable governments – and older generations still recall hardship accessing their money during changing regimes.
"The problem that we have is that there's so much distrust in our community, in financial institutions, and even FinTech companies," Acevedo said. "Our parents and our grandparents come from countries of origin where they had tremendous financial hardship – whether you were in Mexico in a crazy devaluation, or Venezuela or Argentina, where you could never pull out your money from your bank one day and everything you've built is gone."
Suma CEO Beatriz Acevedo
This distrust coupled with a lack of personalized messaging and often shoddy translation means that many Latinos feel isolated and have difficulty navigating their finances using traditional banks and are looking elsewhere, Acevedo said.
Roughly 22,000 people are on the waitlist to use Suma, and it has built an online community of nearly 340,000, Acevedo said. While most Suma users are in California, it also has users in Chicago, New York and Texas. But it is looking to expand and just got a lifeline with a fresh round of funding.
This week, it announced that it raised $2 million to expand its operations and launch mobile apps next month.
The round was led by Chingona Ventures partner Samara Hernandez. Unlike most fintech companies, Suma board and investors are incredibly diverse – Acevedo said its cap table is 77% female and 72% Latino.
Hernandez is on Suma's board and told the Wall Street Journal during its seed raise she was inspired by Acevedo's pitch. "Before she had a name, I was in… I was sold immediately," Hernandez told the Journal.
Suma has raised $3.3 million since its 2020 launch following this round. It will use the new funding to hire more staff and launch its upcoming mobile apps. It generates revenue through subscriptions, but the web platform is now free.
Acevedo said the company is prioritizing digital expansion because its main audience is Millennials and Generation Z – young Latinos ages 28 to 35. As an added bonus, Acevedo said many of those younger users can also encourage their older family members to also get on the app.
Suma's investors also include Los Angeles-based Vamos Ventures' founder Marcos Gonzalez, Ulu Ventures, OVO Fund, Vitalize VC, Supercharged Initiative, The Fund and Gaingels.
Bridging the Gap
The Latino-White wealth gap is staggering, and the pandemic only exacerbated the problem. Acevedo noted the average Latino man makes $.55 for every dollar earned by a white man.
According to the Federal Reserve's most recent survey of consumer finances, the average white family's wealth is roughly five times that of a Hispanic family.
Latinos are gaining ground – the Urban Institute reported this year a young and growing Latino population is expected to make up most new homeowners through 2040 – an estimated 4.8 million more homeowners.
Young Latinos, Acevedo said, "are the ones entering the workforce at the fastest rate and it's a group that has the least wealth."
Acevedo wants to target these potential new homeowners and teach them valuable financial literacy skills to help protect their investments.
One feature launched this week is a financial checkup tool that analyzes a handful of features that impact a person's overall wealth including net worth, debt to income ratio, budgeting and emergency savings to calculate its version of a credit score.
In August, Suma ran Dinero Bootcamp, a youth-focused financial literacy workshop that helped 125 Latinos learn about their money. Wells Fargo granted an undisclosed sum to help Suma target local neighborhoods like Huntington Park, South Central, Downtown and Boyle Heights.
"We're excited to see that (Suma) works, that our community is excited to learn and to do better, and that they trust us, so we need to continue to arm them with all the tools and information and resources," Acevedo said.
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The pandemic has paused a substantial amount of venture activity for women entrepreneurs in Los Angeles. This year is on track to record the sharpest drop in investment in female-led startups in nearly a decade.
Female-founded companies in L.A. closed 2019 with 234 deals worth $1.4 billion. As of September 30, there have been 141 deals and $900 million invested, according to a report from Pitchbook released this week.
VC deal activity for female-founded companies from 2006 through 2020.
The figures, though not complete for the year, show the pandemic is disproportionately hurting female entrepreneurs, eroding strides made in recent years. Across the economy, the pandemic has hit women harder.
In November there were 2.5 million fewer women in the workforce compared to the same time last year, according to U.S. Bureau of Labor Statistics. And economists worry the inequity caused by the pandemic could have long-term impacts.
This setback comes after years of progress for women-owned startups. Last year, investments in female-founded companies hit over $20 billion — 10 times the amount of a decade ago.
Female-founded companies as a proportion of all VC deal activity from. 2006 through 2020
The report did not take into account race, but Los Angeles is notable as a popular city for Latina and Black women founders to begin startups along with New York and San Francisco, according to a survey by digitalundivided, a nonprofit that tracks female entrepreneurs of color across the country. These entrepreneurs tend to have a harder time accessing capital.
Beatriz Acevedo, the co-founder of a new fintech company for Latino youth, was one entrepreneur on the hunt for funding mid-pandemic. She was able to double the pre-seed amount she sought, but she attributed that to her investors. 90% of them are Latina and all are women.
"Even in the middle of a pandemic, of an economic downturn, they saw the need," she said. "I didn't have to oversell myself."
Acevedo, the founder of millennial media company mitú, which was sold to Latido Networks earlier this year, said she had a much harder time when she sought to raise money from traditional investors, most of whom were white men.
"I'm kind of like an outlier," she said. "I'm incredibly grateful and I understand I'm in a position of privilege because not only am I a woman, but I'm a woman and I'm an immigrant. I'm over 50. I've never been in FinTech."
Funding for female founders across the country dropped 31% from the first three quarters of 2019. That's compared to a 16% drop to all-male founders.
Yet, female-founded companies exited faster than the overall market. Pitchboook found that 2020 was on track to mark the 10th straight year of that trend.
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After seeing the pandemic's disproportionate impact on lower-income minorities, Beatriz Acevedo, the co-founder of digital media company mitú, felt compelled to return to the startup world.
On Thursday, the L.A.-based entrepreneur and three-time Emmy-winning producer announced the launch of SUMA Wealth, a fintech company that will seek to provide U.S-born Latinos with financial-inclusion tools and resources.
In 2012, Acevedo launched her L.A.-based digital media company, which is oriented toward Latino youth. It raised over $50 million and boasts a monthly audience of nearly 100 million users. In 2018, Acevedo stepped down as president, and mitú was acquired this year by GoDigital Media Group for an undisclosed amount.
Acevedo will be applying much of the playbook that she used to grow mitú into what is arguably the leading digital media brand among Latino youth to her new venture.
"What mitú did was touch this audience that felt nobody saw them, and nobody got them," she told dot.LA. "That's what I plan to do with SUMA."
L.A.-based entrepreneur and three-time Emmy-winning producer Beatriz Acevedo is the co-founder of SUMA Wealth
SUMA sought a $500,000 pre-seed round but has more than doubled that. The round remains open.
Every funder in SUMA's round is female; most of them are Latina. At a panel on diversity hosted this week by dot.LA, Acevedo noted that her investors were easier to work with than the more traditional set of white male venture capitalists.
The pre-seed round was led by Chingona Ventures, with participation from The Fund, 2045 Ventures, Vitalize VC, Portfolia Rising America, Backstage Capital and OVO Fund, among others.
"I didn't have to explain to any of them why SUMA was important for our community," she said. "All of them come from that same background: where we grow up not talking about money, not talking about investment, being very confused. No matter if you went to an Ivy League school or you are somebody that did not go to college, we're all in the same boat. So it was very personal to them and they fully understood the problem."
In addition to a personal connection, the Latino community also represents a big economic market.
A 2020 study from the Latino Donor Collaborative, for instance, found that if Latinos living in the U.S. were considered a country, it would have the eighth-highest GDP in the world – larger than South Korea, Italy or Brazil.
It's also a rapidly growing segment: from 2010 to 2018, the group's GDP expanded 21% faster than India's and 30% faster than China's, according to the study.
Acevedo emphasized that SUMA is targeting U.S.-born Latinos, a group that she says has felt as if it doesn't quite belong.
Marketers tend to lump this U.S.-born Latino sector either into a general, English-speaking audience or a more traditional, Spanish-speaking group, Acevedo said.
By contrast, what mitú did and what SUMA plans to do is focus on the nuances that make this segment unique.
"The secret sauce (at mitú) was everything that we did was in-culture," she said. "It's nothing special that I did, but see them."
Acevedo said that rather than building a product and hoping to attract users to it, SUMA will start by building a brand that conveys it is "by Latinos for Latinos."
For example, the chupacabra – a mythical beast prominent in Latino folklore – is reprised on SUMA as the money-sucking "chupalana," which accompanies instructional content on topics like lowering debt, budgeting, taxes, investing and deciding whether to buy or lease.
The platform also aims to tap into what Acevedo describes as a different financial ethos. In contrast to the American reverence for self-reliance, for instance, she says, "my mother will tell you she has no money to save and invest, but if it was for someone in her family, she'd give all the money in the world. We're taking those nuances into account."
Acevedo believes developing trust among her target market is a key component to SUMA's brand. She says many Latinos harbor a deep-seated skepticism of traditional financial institutions, in large part due to a history of currency devaluations by Latin American governments that wiped out people's savings without warning.
"There's post-traumatic stress," Acevedo says, which has carried forward into today's younger generations.
Data from SUMA's 30-day beta period suggest this hypothesis has some merit. Acevedo said the company saw engagement rates 20-times higher than a composite benchmark of fintech company engagement rates. And the top questions SUMA has gotten from its users have centered around which institutions are trustworthy.
"They're hungry for this information and [they want] to do better, but they're incredibly confused on how to do it," Acevedo said.
"There are lots of Latino-led and -driven fintech offerings," she added, "but nobody has really built it at scale. I hope to build that."
SUMA is co-founded by Xavier Gutiérrez, president and CEO of the Arizona Coyotes hockey team – the first Latino to lead an NHL franchise.
"The economic success of the United States and its recovery from the current pandemic rely on the economic empowerment of this community. We exist to provide that empowerment," he said in a statement.
Sam Blake primarily covers entertainment and media for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA
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