– Mexico is a dynamic hub for Latin American startups
– Start-up companies in Fintech, transportation and logistics, and e-commerce
Taking advantage of the pandemic as an opportunity, Mexico promotes 'innovation through digital transformation', the fastest in Latin America, and is sparing no support from the government*, such as actively investing in artificial intelligence and data technology. Thanks to such support, tech-based startups and venture companies are emerging with the keyword 'digitalization'.
* Mexico has the Production and Development Office (Unidad de Desarrollo Productivo, UDP), the Small and Medium Enterprises Support Center (MiPYME), and the National Entrepreneur Fund (Fondo Nacional Emprendedor, FNE) within the Ministry of Economy to revitalize the economy. providing information.
[Source: Mexican Government Entrepreneur Fund site]
Mexico is called the dynamic hub of startups, and fintech, transportation and logistics, and e-commerce are driving the growth of the startup market. According to StartupBlink, a startup environment evaluation was conducted in 100 cities in 1000 countries around the world, of which 15 cities in Mexico were included. Among them, Mexico City ranked 44th, Monterrey 139th, and Guadalajara 202th.
<Top 10 cities for startups in Mexico>
[Source: StartupBlink, 2022.6.]
In addition, Vincent Speranza, General Director of Endeavor Mexico, noted that the growth of the business ecosystem has stimulated job creation. Startups, one of the Endeavor programs, created 2021 jobs at the end of 4, up 1107% from 2020 in 3 and 2656% from 25 in 2019. In addition, the ¨ enterprise ecosystem (El ecosistema de emprendimiento) is more active and higher than ever. In Mexico, there are already entrepreneurs with more than 3 years of experience and they are participating in ventures. He added that foreign investors are increasing in the Mexican startup market.
<Investment round (investment amount) by start-up company in Mexico in 2021>
(Unit: million dollars)
[Source: Bloomberg Línea, 2021.12.]
The Mexican startup is developing rapidly, attracting investments from the world’s leading financial companies including SoftBank, Goldman Sachs, D1 Capital Partners, DST Global, Tiger Global Management, Baillie Gifford, CPPIB, Advent International and Silver Lake. are doing
Mexico's first unicorn, Kavak, took four years to register as a unicorn, but another unicorn, Clara, became a unicorn in eight months. Valoreo transitioned from seed fund to Series A in six months, and e-commerce company Merama went from Series A ($4 million) in April 8 to Series B ($6 million) in September 2021. has grown
Mexico Startup Market Trend
According to StartupBlink, Mexico's startup level is ranked 35th in the world (as of June 2022), in detail: △ 6th in fintech (35 companies) △ 119th in social & leisure (36 companies) △ health sector (Health) ranked 115th (39 companies). As of June 62, it is found that there are a total of 2022 start-up companies in Mexico, and the number of start-ups in these three fields accounts for 6% of the total.
In terms of fintech, Mexico has the second largest number of fintech companies in Latin America and the Caribbean after Brazil (with a market share of 31%).
<Fintech Companies Share in Top 2021 Countries in Latin America and the Caribbean in 5>
[Source: Finnovista, 2022.5. ]
Mexico Unicorn Companies
There are eight Mexican unicorn companies (as of March 8), including Kavak, which was registered as the first Mexican unicorn company in 2022, as well as Bitso, Clip, Konfío, Incode, Jokr, Merama, and Clara. There are 3 companies with potential to become unicorns in Latin America, of which 2020% were founded in Mexico, the ALLVP fund sees.
<Mexican unicorn companies (as of March 2022)>
(Unit: million dollars)
[Source: El Economista, each company website and Mexico City Trade Center processing]
Implications – Opportunities in the Mexican startup market
With a strategic location bordering the United States and a port connecting the Atlantic and Pacific Oceans, it is a region with excellent geographical requirements. It also benefits from the US-Mexico-Canada Agreement (USMCA) and the Pacific Alliance, an economic community that includes Chile, Colombia and Peru. In addition, the Mexican government opened a tuition-free technical college to nurture talent, and more than 13 engineers graduate every year, and has a talent pool of over 70, providing a rich software engineering talent pool to startups in Latin America. . Low labor costs can save about 67% of labor costs compared to US software developers.
Vicent Speranza, Managing Director of Endeavor Mexico, noted that the global logistics disruption presents opportunities for entrepreneurs in the supply chain sector, especially those providing technology solutions to this sector. He also sees growing interest in insur tech (a technological innovation designed to derive savings and efficiencies from the current model of the insurance industry) and food tech. It is recommended to use Mexico as a test bed and bridgehead to enter the Latin American startup market by using the relatively developed startup ecosystem in Latin America.