Demand among Black, Latino students fuels college entrepreneurship programs

Stephon Sanders is a soft-spoken 16-year-old Black teenager in Tampa, Florida, who loves playing basketball and video games like Fortnite and Apex Legends, and who can often be found in an athletic jacket and basketball shorts.

He also happens to be the founder and chief executive officer of a successful mobile entertainment business, Street Gamez, that can amp up any party with a 32-foot, $55,000 trailer full of video game consoles for up to 28 players. He plans to add a $45,000 mobile gaming bus staffed by a second crew and move beyond the Tampa area to serve North and South Carolina.

Sanders’s single mother, Tiffany-Autumn Bell, 35, cashed out much of her savings and gave up nearly all of her already scarce free time to support her then-13-year-old son’s dream of launching a mobile entertainment video business.

To Bell, an Army veteran who served in Afghanistan and has her own full-time job as an IT project manager, helping Sanders become an entrepreneur was about making sure his life and career options did not become limited by his race.

“I don’t want my son going into the world thinking he can’t do things,” said Bell, who is Street Gamez’s chief operating officer and handles booking and billing.

To help, Bell took an eight-week certificate program in entrepreneurship and innovation at Tampa-based Hillsborough Community College and enrolled in an associate degree program in business there from which she will graduate next year.

Increasing numbers of Black and Hispanic Americans are starting their own businesses to serve their communities and avoid working for someone else.

“When we ask random students on campus what their career ambitions are, I would say 70 to 80 percent of them are telling us it is to be entrepreneurs,” said Thaddeus McEwen, a professor of entrepreneurship at historically Black North Carolina Agricultural & Technical State University.

In response, colleges and universities are launching or expanding entrepreneurship programs, which they see as a way of increasing enrollment and attracting more diverse students.

Entrepreneurship in general is up since the start of the pandemic. Nationally, in 2020, an average of 380 out of every 100,000 adults became new entrepreneurs in a given month, according to the Ewing Marion Kauffman Foundation. That’s up from 310 per 100,000 in 2019 and by far the highest level of new entrepreneurship in the 25 years the foundation has tracked this data.

The rate of entrepreneurship is highest among Latino and Black Americans, the report found — 520 per 100,000 among Latino and 380 among Black Americans, compared to 360 for whites and 350 for Asian Americans. For Black Americans, that was close to double the rate in 1996, the first year the Kauffman Foundation tracked ethnicity data, and up sharply from 2019. Latino numbers have also grown dramatically.

Many are entrepreneurs of necessity, the foundation says, forced to start their own businesses because they were laid off or for other reasons beyond their control. Black and Hispanic Americans make up a disproportionate share of workers in many of the sectors most affected by the pandemic, such as the retail, restaurant, construction and service industries.

Among Latino Americans, the high level of entrepreneurship is also being driven by the large number of Latino immigrants, according to the Kauffman Foundation. It notes that immigrants engage in entrepreneurship at rates higher than nonimmigrants.

COVID-19 for many has also been a wake-up call that life is fleeting and inherently risky, encouraging people to launch businesses aligned with their passions.

At a time when undergraduate enrollments for many programs are dropping, especially at community colleges, demand for entrepreneurial know-how could bring students back, noted a March brief by the Association to Advance Collegiate Schools of Business (AACSB) International and Studyportals, a website students worldwide use to search for educational programs.

“We saw a huge and unprecedented spike in global interest in master’s, bachelor’s and associate degree programs focused on entrepreneurship in March 2020 — up 66 percent over the same month the year before,” said Edwin van Rest, CEO of Studyportals. The pattern was similar within the United States, van Rest said.

In the U.S., growing participation in entrepreneurship education has been a trend for some time and has been particularly pronounced for Black and Hispanic students, with larger numbers of these students completing degrees and certificates in entrepreneurship and small business operations, according to data from the U.S. Department of Education.

While the number of white graduates of these programs grew 16 percent from 2018 to 2020, the number who are Black increased nearly 72 percent and the number who are Hispanic, 40 percent.

Many higher education institutions are responding by offering more entrepreneurship programs. The number of entrepreneurship programs offered by U.S. higher education institutions, including master’s, bachelor’s and doctoral programs, is up nearly 9 percent in the last five years — and the number of specialized master’s programs, 41 percent, the AACSB says. There also appears to be a growing number of short-term, nondegree certificate programs aimed at improving entrepreneurship skills.

“There are exceptional opportunities for higher education in the U.S. to target minority students who might prospectively enroll in entrepreneurship programs,” said Timothy Mescon, the AACSB International’s executive vice president.

Entrepreneurship and small business education programs are particularly widespread at community and technical colleges like Hillsborough. Community colleges serve the majority of students from underrepresented groups, said Martha Parham, senior vice president at the American Association of Community Colleges.

One in six community colleges surveyed by the National Association for Community College Entrepreneurship, or NACCE, in a June 2021 NACCE membership survey said their entrepreneurship program is focused on serving one or more historically underserved populations.

Entrepreneurship education supporting Black, Hispanic and Native American students is also being driven by philanthropy and a generally increased emphasis on diversity, equity and inclusion in higher education. NACCE itself has grown from having a $1.2 million budget in 2015 to $8.5 million in funding this year, with membership over the same period up over 25 percent, to more than 300 higher education institutions, said Rebecca Corbin, NACCE’s president and CEO.

The organization has formed partnerships with foundations that emphasize entrepreneurship education targeting disadvantaged minorities, veterans and women, said Corbin.

Historically Black Bowie State University opened a new $42 million entrepreneurship academy in August that includes space for student businesses and a residence hall for more than 500 students.

The idea is to train not only some students in entrepreneurship, but encourage all students “to think innovatively and to develop the entrepreneurial mindset,” said Johnetta Hardy, the academy’s executive director.

Some entrepreneurship educators say entrepreneurship programs need to be tailored to the needs of particular minority groups. In the long run, for example, higher education institutions will achieve more by trying to help existing Latino businesses expand than by supporting recent Latino business startups, said Jerry Porras, a Stanford University emeritus professor of organizational behavior and change.

The Stanford Latino Entrepreneurial Initiative does so by helping established Latino businesses with revenues of at least $1 million expand, said Porras, who co-coordinates the project.

“If we can create very large, Latino-owned companies, it will profoundly affect society as well as greatly help many smaller Latino businesses and businesspeople by serving as models for them, providing customers for their goods and services, and allowing their owners to join those really large businesses as executives,” said Porras.

The Stanford project offers a seven-week program on how to scale a business and provides mentors, access to capital (though no guarantees of loans or investments) and connections to a network of Latino-owned businesses.

The businesses owned by nearly 800 alumni of the program have combined annual revenues of about $5 billion, more than 39,000 employees and operations in 31 states, Porras said.

But even more seasoned entrepreneurs face long odds that do not necessarily improve with time. An average of 32.4 percent of new businesses fail within two years, 51.2 percent within five years and 66.4 percent within 10 years, according to a U.S. Small Business Administration analysis of new business survival rates using data from 1994 to 2018.

Minority entrepreneurs face additional challenges; on average, they have less household wealth and less access to mainstream grants, loans and equity investors and often serve less affluent communities than white-owned businesses.

Entrepreneurship programs can help make it easier for them to get loans, grants and investment. Eighty-two percent of Latino alumni of the Stanford program got SBA-backed Paycheck Protection Program loans, for example, in the midst of the pandemic, while, overall, just 28 percent of white-owned and 18 percent of Latino-owned businesses of similar size got the loans, Stanford research shows.

Some say entrepreneurship training can improve business survival rates, too. The Hillsborough entrepreneurship program that Tiffany Bell attended has mentored and provided seed funding for Bell and 25 other entrepreneurs over the past two years, including five Hispanic and seven Black entrepreneurs, and 14 female entrepreneurs, said Hillsborough professor Beth Kerly.

There’s one attribute that those entrepreneurs all share: They’re still in the game. Despite launching just before or during the pandemic, 25 of the startup businesses are up and running and one has been sold off, according to Andy Gold, another Hillsborough professor and a former Wall Street investor who co-leads the program with Kerly. Some of the businesses are showing fast growth as Covid restrictions ease, Gold said.

He credited “ridiculously intrusive mentoring,” as the key to this success.

Gold, Kerly and a collection of volunteer mentors check in with their students after graduation. “Before we talk about all your good news for your company, you’d have to tell me what your monthly revenues are and how that compares to last month, year over year, plus answer a whole bunch of other financial questions,” Gold said.

“Most entrepreneurs, we go in and we just do what we think is right, and often that is not the proper and best way of doing things,” Bell said. “So I realized from the classes that, ‘Oh, I’m working harder than I actually have to be working,’ which freed up time to be more productive.”

Not all entrepreneurs who succeed in keeping their ventures afloat will strike it rich. Many are struggling and overworked. “You can limp along with a small business and be no better off than somebody earning minimum wage,” said Josh Wyner, executive director of the College Excellence Program at the Aspen Institute.

Even people who teach entrepreneurship are skeptical of the value of some entrepreneurship education. “A lot of classes colleges make you take are not really necessary for your success as an entrepreneur,” said David Heredia, an entrepreneur and instructor at College of the Canyons, a community college in California. “There needs to be a laser focus on what student entrepreneurs need to succeed, like public speaking, which should be a required class.”

Some Black and Latino entrepreneurs say they would rather work for themselves than for white-owned companies. Heredia, a self-employed Black and Latino animator, illustrator and author, for example, left what he thought would be a dream job as an animator for Walt Disney Feature Animation when his manager reminded him that he was banned from taking outside creative commercial assignments. He was at the time working on art projects on the side that focused on minority images and voices he said he thought were not being adequately reflected by Disney and others — in an era before movies like “Black Panther” and “Moana” broadened minority representation in Disney films.

Heredia has since built a six-figure annual income as a freelance illustrator, author and teacher. His business, Heroes of Color, promotes diversity through art and education that feature minority characters and themes.

For many minority entrepreneurs, self-esteem is a critical issue that entrepreneurship education should address, he said.

“There should be more emphasis on cultivating entrepreneurship by Latinos and African Americans, because it will help them be more self-sufficient, to not have to rely on others for help,” Heredia said.

Family tradition is another reason Black and Hispanic Americans start their own businesses. Dewayne Kimble, 52, graduated from an entrepreneurship training program offered through Syracuse University’s Institute for Veterans and Military Families in partnership with Hillsborough Community College. After retiring from the U.S. Department of Veterans Affairs, Kimble, who is Black, launched a veterans benefits consulting business, KMD89 VA Claims Consulting, that now has almost 150 clients, he said.

Many of Kimble’s great aunts and uncles from southeast Missouri were entrepreneurs. “One of those siblings bought a bus,” he said, “fixed it up and began offering bus services. … Then he started buying old cars, fixing them up and selling them. And then my grandmother had two other brothers who owned land and farmed it. And another sibling, an older sister, had a boutique selling women’s clothing on the south side of Chicago.”

Black and Latino entrepreneurs also are starting businesses aimed at giving back to their communities. David Favela left his job as a global business manager at Hewlett Packard in 2018 to make a fulltime pursuit of the sideline business he had founded in 2013, Border X Brewing in San Diego. Border X brews and serves up Mexican-themed beverages such as Blood Saison, a bright red, tart beer inspired by a Mexican hibiscus tea known as “agua de Jamaica,” in three taprooms in Southern California working-class Latino neighborhoods.

“This work is incredibly meaningful to me,” Favela said. “It isn’t just about making great beer, which is obviously our passion. But it’s also about serving and building our community.”

Border X was one of the Stanford participants that got a PPP loan, which Favela says allowed him to pay his 25 full-time employees one last time during the pandemic before he briefly closed the business in December 2020 for a month.

He said he’s now on target to earn $3 million this year, up from $1.8 million in the pre-pandemic year of 2019. Favela said his business plan forecasts $10 million in sales by 2024, driven by an expansion from the existing three taprooms to six.

For some immigrants, startup businesses are a way to support people in their home countries. While a business student at Babson College’s Summer Venture Program, Ecuadorian Juan Giraldo started a business producing an herbal tea based on Ecuadorian recipes and ingredients. The business, Waku, Inc., relies on and helps support Andean farmers.

“I came to Babson specifically because I wanted to start a company with socioeconomic impact in my country,” Giraldo said.

The company is on target to generate $650,000 in sales this year, he said, up from $135,000 in 2019, which was its first full year in business.

Back in Tampa, Tiffany Bell is now reducing son Stephon’s role running day-to-day operations at Street Gamez and focusing him on public speaking, developing the future of the business and building his own brand. Bell said that will position Street Gamez to survive while he goes to college — which she said is nonnegotiable.

At present, serving as an entrepreneurial role model may be the most important role Stephon can play, Bell said.

“His success has demonstrated to his peers that entrepreneurship is possible at any age, that you can have a career that involves a passion you love, that hard work can bring success and that this is a career option open to kids who look like him.”

This story about Black and Latino entrepreneurship was produced by the Hechinger Report and supported by the Institute for Citizens & Scholars. Sign up for the Hechinger Report higher education newsletter.