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When Gilbert de Cardenas, ’04, wanted to develop a new business targeted to the Hispanic market, he had no problem finding investors. With the Hispanic community having an estimated $450 billion in buying power, investors are eager to back promising start-ups.
Stern Fisher Edwards, an L.A. investment banking firm, found investors very receptive to de Cardenas’ proposed business to develop lunchmeats that meet the special tastes of Hispanics. Investors are to earn 9 percent a year plus amortization. After five years, they will have their investment repaid and will be given the chance to buy up to 20 percent of the company.
A second generation entrepreneur—his parents founded Cacique the country’s largest manufacturer of Hispanic cheeses—de Cardenas feels he understands independent ethnic grocers better than big food companies like Kraft and Hormel. According to de Cardenas, “They depend too much on market surveys from the major supermarket chains.”
What’s at stake is the Hispanic lunchmeat market estimated at $1.5 - $3 billion. Don Gilberto meats forecasts sales of $25 million in its first year. That figure is expected to jump to $50 million in 2010.
But de Cardenas isn’t afraid of competition. Instead, he sees the upside. Don Gilberto’s success could make it a takeover target. That would benefit his investors. At the same time, it would allow de Cardenas to provide his children with opportunities—and perhaps create a third generation of entrepreneurs.
The original article appeared in the New York Times on August 18, 2005.