Mexico Marches Ahead Seriously: The Next Silicon Valley Could Be Speaking Spanish
In the last years they have been talking of Mexico as one of the great ecosystems for startups in Latin America. The country is growing as an attractive market that has already seen a series of unicorns of their own crop got born and has begun to call the attention of foreign investors, global accelerators, and mentors. Some natural values are added to that, so that the Mexican DNA becomes more interesting: Talent, originality and resilience.
Counting more than 158 startups, Mexico is the biggest fintech market in Latin America , getting ahead of other big markets like Brazil (130 new enterprises) and Colombia (77 new enterprises). The majority of these enterprises focus on payments and remittances, personal finance administration, crowd funding and loaning. The Mexican startups signed 73 finance agreements last year for 130 million dollars, the first time that the country has the largest quantity of transactions of venture capital in Latin America, according to the Latin American Association of Private Equity & Venture Capital.
According to the most recent Radar of the Finnovista fintech sector, issued by the middle of last year, Mexico is placed as the leader of this industry once it summed 238 startups of financial technology, in respect to the 230 that were identified in Brazil. The report outstands that in the first half of 2017, there appeared at least 80 new startups, which represents an increase of 50% since the last publication in August 2016, where 158 startups were identified. The startups Fintech sector with largest participation is that of payment and remittances, followed by that of loaning that grew 66% in relation to the report presented last year.
The next ones are enterprise financial management, personal finances management, crowd funding, and insurance that increased 114%. The Finnovista study also reveals that Mexico City is the zone that counts the largest number of enterprises: the 71% of the identified companies are in the capital city of the country, while the 11% are in Monterrey, and the 10% in Guadalajara. Another important data given by the report is that the great majority of these startups (90%) only operates in the country, and the other 10% is working in other countries.
What are the reasons why Mexico is consolidating as a serious alternative of technological development in Latin America? There are many reasons that even take us to think of Mexico as an outstanding actor in North America, taking advantage of the talent, the competitive wages, life quality, and the flexibility of regulative frame. Last year, The Washington Post presented a report referring to Technology in the south of their frontier outstanding important global enterprises like IBM, Oracle and Intel, which had decided to install in Guadalajara, also known as the “Creative Digital City” of the country.
The growing of the industry related to the formation in codifying in The USA has had a replica effect in Mexico, which is absorbing a significant percentage of that formative activity, essential for the development of the sector. Trilogy Education, a startup that is associated to universities to help to reestablish intensive boot camps of codifying, linked to Tecnológico de Monterrey (ITESM) (Monterrey Polytechnic School) to create a program for enabling people to use technology at full time in the campus.
A NATIONAL STRATEGY TO CREATE THE MEXICAN ¨SILICON VALLEY¨
Mark Goodenough, a British Enterprise manager, now living in Mexico, was recently telling in an interview for www.virgin.com “that Mexico is a very sociable country that is likely for trading relations. The population is very friendly, and it is easy to make relations. To be a foreigner could be an advantage and a disadvantage. Everything is possible in Mexico if one has money, and I mean everything.
The salaries are generally low, but that allows employing good people to do anything. It is a young and dynamic economy; that is why, there are many business opportunities”. This scenario depicted by the British enterprise manager is recorded on the minds of many big companies of important global investors, who consider Mexico as the land of great opportunities for the undertakers in the technological sphere. The very Mexican administration foresaw a long time ago this stimulating factor, and together with different private companies have developed a strategy to attract and canalize the talent as well as the money.
In 2004 the Secretaría de Economía de México (Secretary of Mexican Economy) and the Fundación México-Estados Unidos para la Ciencia (FUMEC) (Mexico-USA Foundation for Science), created the TechBA Program, with the aim set on strengthening the enterprise capacities, technologies, and innovators of small and average enterprises based on technology and to help new enterprises to project their products and great ideas into the foreign markets”. Two years later TechBA started to select promotions of Mexican startups to participate in an exchange program in Silicon Valley, which would allow them knowing the way to work in the cradle of the world startups and receive something of the impulse, experience and organization of the main companies originally from California.
But it was in 2013, with the creation of Instituto Nacional de Emprendimiento (INADEM), (Startups National Institute) the one with more determination influence for the exponential growing of startups in Mexico. Just a year after its launching, INADEM, had already incorporated 658 million dollars in the local ecosystem, money that helped 620.000 enterprise managers, micro, small and average enterprises. That capital was interpreted as the creation of 6.000 new companies and 73.000 new employments. The Mexican government has also developed a legislation that favors the business launching process.
In September 2016, the government made changes in the General Law of Mercantile Societies that allowed registering any enterprise with an annual income of until 5 million pesos (300.000 USA dollars) without cost, and in 24 hours. The economic and social context that eased, by the end of the last century, the irruption of Silicon Valley as the biggest center of creative talent of the world, can now be identified in Mexico, where in cities like Monterrey, Guadalajara, Jalisco or the very capital have turned into dynamic motors of creation and development.
In fact, the very exhaustion of Silicon Valley as digital reference and the need to create new centers to pay attention to the growing world demand, are giving an impulse to the geo-strategies of Mexico and its human resources.
TALENT, EDUCATION AND FINANCE, KEYS OF THE MEXICAN MIRACLE
The country has more than 130.000 students who graduate every year as engineers, it has competitive operative costs very close to those of the USA, and it is one of the greatest economies in the region. As it was recently said in the prestigious Financial Times, an increasing number of university students are graduating as scientists, designers, sellers, or enterprise managers. “The creative class in Mexico is getting expanded rapidly and the new generation is full of professionals who are not afraid of making mistakes. In a static work market, it is creating the ideal basis for undertakings. In 2016, the investment of seed capital in the country averaged about 100.000 American dollars.
The coming enterprises that include apps for microcredit, platform of mean roots, food delivery services and payment services have represented some of the most famous local success stories. Today, cities like Guadalajara, attract more than 6.000 technology enterprises and almost 500 new enterprises of other sectors. Moreover, when money starts to flow more easily the growing symptoms are definite. In fact, the access to finance has traditionally been the great problem undertakers have faced, not only in Mexico, but also all over Latin America.
Now many incubators, accelerators, and international funds invest in Mexico. The quantity of Mexican funds in seed capital and venture capital has rapidly increased from three in 2008, to fourteen in 2012, and to more than 16 in 2016. If Mexico is the new China of Latin America, as many international communication means dare to say, this is something to know before the decade finishes. Farther than a headline in the press, the phrase hides the fascination the country provokes, besieged by big political problems and violence; it has in its undertaking class, one of the greatest talents to survive to all adversities.