In a survey of more than 5,000 business owners, a Stanford GSB study found that Latino business owners often face discrimination when it comes to securing financing. Stanford Business interviewed four of these business owners, and this is one of their stories.
When Tony Aguilar left Pecos, Texas, to attend college about 15 years ago, he headed to Indiana University, opting against Ivy League schools in favor of keeping a low profile. Despite having a father who constantly instilled confidence, Aguilar had doubts about where he belonged.
“I was a first-generation high school graduate, and I looked and dressed very differently than most of my peers,” he recalls. “I decided to go where I thought I’d fit in.”
Today, Aguilar should fit in just about everywhere. He’s the 33-year-old founder of Austin-based Chipper, a thriving mobile app start-up that allows student loan recipients to manage, pay, and refinance their school debt in one place. But even though his company manages $150 million in student loans, Aguilar still feels that he’s sometimes perceived negatively by investors.
“Raising financing has always been very challenging,” he says. “A lot of VCs have preconceived notions regarding how you look or dress. They’re natural biases. And it’s frustrating to experience that.”
The founder and former CEO of Student Loan Genius (the first student loan benefit to allow companies to help employees pay down their student debt), Aguilar launched Chipper in August 2018, after the company was chosen by the venture capital firm 500 Startups as one of 16 companies — out of 2,500 start-ups worldwide — to participate in the firm’s “Batch 23” accelerator event.
“We raised $1 million in the pre-seed round,” Aguilar says. One of the round’s early investors was Dan Macklin, MS ’11, a Stanford MSx alumnus and cofounder of SoFi, one of the biggest student loan refinancing companies. He was followed by Fabrice Grinda, Forbes magazine’s no. 1-ranked angel investor in the world.
Despite such endorsements, Aguilar believes some VCs approach a meeting with a minority CEO differently than they might otherwise. He came to that conclusion after reading a study in Harvard Business Review about the different types of questions male and female entrepreneurs are asked by VCs — and how it affects the amount of funding each receives. Women tend to be asked questions about the potential for losses in their business, while non-minority men tend to be asked about the potential for gains. The research resonated with Aguilar.
“It opened my eyes,” he recalls. “I’ve experienced the same thing as a minority, and it’s something I’ve discussed extensively with other minority founders.”
Entrepreneurs who are asked about the potential for gains — or who are able to “flip” a question about potential losses into a discussion about potential gains — tend to raise significantly more funding than those who field and answer questions on potential losses, Aguilar notes.
“There can be extreme bias going into these conversations,” he says. “Now, when I’m asked questions in a pessimistic tone, I answer in an optimistic way. You have to learn tactics like that, because you don’t always know that it’s happening. For a lot of entrepreneurs, it’s hard not to take it personally, and it can make you second-guess whether you have what it takes.”
Aguilar cites persistence and outreach as keys to his successful financing efforts.
“The only way to do this is to ask for help, and Latino males don’t do that,” he says. “But networking is incredibly important. As Latinos, we tend to create cliques; we stick with other Latinos, and we can’t be doing that. The VC world is run by white males, and most are not bad or biased. It’s a matter of opening your network, asking for help, and getting into the same room with the people who can really change the trajectory of your company. Knowing that there will be bias at certain times, learning to adjust to it in a meeting, and taking control of it.
“If we want to make an impact, we need to get into those pockets,” he adds. “If they like you or don’t, ask them who they know who would be excited about your company. If you continue to get those doors open, opportunities will open up.”