David Perez (MBA 1996) readily admits that launching Avance Investment Management in May 2020, at the height of the pandemic, was “the worst timing ever.” But the Cuban native, who studied engineering in East Germany and saved his earnings from working nights in a factory so he could continue his studies in America, is used to overcoming challenges. “When we founded the company, the economy was contracting and no one wanted to take any risks. As it returned to some semblance of normal, people started feeling better about risks and opportunities,” says Perez, a longtime investor in the Latinx business community who recognizes its growing potential in the US economy.

Avance’s focus on lower middle-market business services and consumer sectors that often correlate to the types of companies founded by Latinx entrepreneurs meant that the pandemic-related adversities this community faced affected Avance as well. Happily, Perez notes, the private equity firm is now thriving as Latinx businesses are recovering. Perez cofounded Avance with his HBS classmate Luis A. Zaldivar (MBA 1996), with whom he had worked at Palladium Equity Partners. “At HBS I met amazing people who were inspiring and who opened my mind to different ways of thinking about things. The School has been transformational, and clearly when you start a business with your HBS classmate, that says it all,” Perez explains.

After years at Palladium, he and Zaldivar began to reimagine how they wanted to spend the rest of their careers. “For us, the answer was partly ‘let’s build something that’s different than what you see out there, and let’s build a firm that can succeed.’ So, that’s what we’ve done with Avance,” says Perez, the firm’s managing partner.

Perez and Zaldivar continue to invest in Latinx business ventures as they did at Palladium, understanding this community’s strength and influence in spite of the COVID-19-related health issues and job losses that have affected Latinx Americans. US Secretary of the Treasury Janet Yellen also recognizes the role of Latinx businesses in the US economy. In her remarks at the US Hispanic Chamber of Commerce Virtual Legislative Summit in 2020, she said: “If someone tried to design an economic crisis that would unduly target the Hispanic community, they’d probably come up with something that looks a lot like COVID-19.” Nevertheless, Yellen was encouraging: “I know Hispanic workers can power our recovery—potentially in an even bigger way than a decade ago.” Perez shares Yellen’s optimism. “Latinx job creation has reset itself from the start of the pandemic to a pretty healthy level today. As long as the economy stays strong, it’s going to drive a lot of Hispanic employment,” Perez says.

A strong economy is also going to buoy Latinx entrepreneurs, who had difficulty both accessing funds through the Paycheck Protection Program and finding alternative sources of financial support—in addition to dealing with other barriers to entry they regularly face.

“A December 2021 McKinsey study indicates that the number of Latinx businesses getting started is astounding,” says Perez. He adds that, according to the report, the Latinx community is among the most entrepreneurial segments of the US population, starting more businesses per capita than any other racial or ethnic group in the country.

“What we do is invest in businesses that are growing faster than the GDP, which is climbing now because of the recovery, but traditionally, it’s been 2 to 3 percent over the last 10 to 20 years,” Perez says. “We want to bring our skill set and experience to help these enterprises scale both organically and through acquisitions.”

Avance’s cofounders have carved out a niche in the private equity world, but they recognize that others are becoming aware of the potential of the Latinx business community. “I welcome the competition,” Perez adds. “That will mean people are acknowledging that this is an important sector in which to invest.”

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