Emily Lauren Burg
Businesses targeting Hispanics get support
Investors backing Hispanic-oriented businesses say they're pursuing an investment strategy that's almost a no-brainer in light of demographic trends.
By Josh Friedman
Los Angeles Times Service
October 2, 2005 (excerpt)
Businesses are targeting the Latino consumer like never before, and investment firms are lining up to back them, sensing the chance for big returns.
Linea Capital, a start-up investment firm with offices in Santa Monica and New York, hopes to raise $50 million over the next two to three years to buy stakes in financial services, media, marketing and food companies focusing on the nation's 41 million Latinos.
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Investors backing Latino-oriented businesses say they're pursuing an investment strategy that's almost a no-brainer in light of demographic trends: Latinos have more than $650 billion in purchasing power, and that figure is expected to top $1 trillion by 2008.
"We were immediately drawn to the U.S. Hispanic market," said Emily Burg, who co-founded Linea with Cristina Almeida, a former colleague at Wall Street investment firm Wasserstein, Perella & Co. (now Dresdner Kleinwort Wasserstein). "We saw that this market could deliver returns without the political instability and other risks you get with [non-U.S.] emerging markets."
Almeida, 46, and Burg, 30, worked together in Wasserstein's emerging markets division, focusing on investments in Latin America.
Linea, whose name is Spanish for "line," will focus mainly on smaller companies with $5 million or less in annual sales, which constitute the vast majority of Latino-oriented businesses.
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Linea sees potential in three industry sectors in which Latino consumers wield clout:
• In financial services, enterprises that can streamline, safeguard or regulate the fragmented business of money transfers to Latin America are growth candidates, Burg said. More than $30 billion a year flows from the U.S. to Latin America.
• Media and marketing companies that can reach Spanish-speaking consumers also hold appeal, as advertisers are eager to connect with that audience, she said.
• Food and beverage companies are a natural as well. With many large, multigenerational families, Latino households spend an average of 46% more on their weekly grocery bills than the general population, Burg said.
Unlike pure investment firms, Linea also offers advisory services to entrepreneurs targeting the Latino market.