America’s entrepreneurial boom begins long before venture capital

Latino-owned businesses added 180,000 net new firms between 2017 and 2023 while white-owned firms declined — and the talent pipeline behind that growth runs through Minority-Serving Institutions now facing funding uncertainty.

The United States has spent years worrying about slowing business creation. But one group of entrepreneurs has quietly prevented that decline. According to a new report out of Stanford, between 2017 and 2023, Latino-owned businesses added 180,000 new firms while white-owned businesses lost roughly 140,000. Put differently, without Latino entrepreneurs, America would have ended the period with fewer businesses than it started with.

Latino entrepreneurs weren’t simply contributing to America’s business growth. They were preventing its decline.

Yet this remarkable economic story has received surprisingly little attention. At a moment when business leaders are searching for new engines of economic growth, one of the country’s fastest-growing entrepreneurial forces has been hiding in plain sight.

Latino-owned businesses added nearly one million jobs during those six years, compared with roughly 658,000 among white-owned firms. Revenue climbed from $495 billion to more than $832 billion, a 68 percent increase compared with 45 percent growth among white-owned firms. Latino-owned businesses generated more net new firms and jobs than businesses owned by any other major racial or ethnic group.

But this isn’t simply a story about one community. The broader Latino economy now approaches $4 trillion in annual economic output, making it one of the world’s largest economies if it stood alone. It is growing more than twice as fast as the overall U.S. economy.

These entrepreneurs did not simply appear. Every founder begins somewhere. Behind every successful entrepreneur is a talent-development system that helped prepare them. We often celebrate entrepreneurs after they build successful companies but spend far less time thinking about the institutions that helped prepare them.

Colleges and universities, particularly Minority-Serving Institutions, are part of America’s economic infrastructure. They produce workers, innovators, and entrepreneurs.  If policymakers and business leaders want more business creation, they cannot afford to weaken one of the country’s most productive talent pipelines.

As a former Title V administrator at a Hispanic-Serving Institution, I have spent years studying how colleges create pathways into economic mobility. Research consistently shows that these institutions produce strong workforce, degree completion, and economic mobility outcomes despite serving students with fewer resources.

The story is visible at Compton College, a Minority-Serving Institution in California. Over the past decade, the college has invested in the supports that help students complete college and enter the workforce like dual-enrollment programs, workforce advising, childcare, healthcare access, basic-needs supports, and transfer pathways. These are often described as “student services.” Business leaders should recognize them as investments in future workers and entrepreneurs. 

Corporate America spends billions searching for talent. Yet one of the country’s fastest-growing entrepreneurial pipelines already exists. Partnerships with these institutions offer companies access to future founders, engineers, healthcare workers, technology professionals, and business leaders. Supporting these institutions is not charity. It is a long-term talent strategy.  

IPEDS data show that Compton College outperforms many peer institutions in completion and transfer despite serving large numbers of Pell-eligible students. Those outcomes strengthen local labor markets and expand the nation’s talent pipeline.

But federal support for Minority-Serving Institutions has become increasingly uncertain.

This debate comes at a pivotal moment. Even as new research documents the rapid growth of Black and Latino entrepreneurship, policymakers are reducing or redirecting investments in higher education, including programs that support many Minority-Serving Institutions. America cannot expect to produce more entrepreneurs while investing less in the institutions that educate them.

Policymakers should strengthen these institutions through investments tied to workforce development, entrepreneurship education, and student success. Business leaders should do the same.  Rather than viewing partnerships with Minority-Serving Institutions as philanthropy, companies should view them as long-term talent investments through internships, workforce partnerships, entrepreneurship centers, and research collaborations.

Returns on educational investment also extend well beyond the individual student. They benefit their families, neighborhoods, employers, and regional economies. A healthy workforce pipeline is not a social luxury. It is fundamental to doing business.

The future of American entrepreneurship will not be determined solely by venture-capital or startup investment. We can invest in the institutions preparing tomorrow’s entrepreneurs or continue treating them as expendable.

America cannot celebrate record entrepreneurial growth while underinvesting in the institutions producing tomorrow’s entrepreneurs. America’s next generation of entrepreneurs is already in our classrooms. The question is whether we will invest in them before our competitors do.  Strengthening those institutions is not simply education policy. It is economic policy.

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This story was originally featured on Fortune.com