As you may know, one team members of Mission:Enterprise is from Mexico. Since the project is about entrepreneurship, we were interested in the different situations of the participating countries regarding start-ups. In this article you can find out more about the entrepreneurship situation in Mexico, no matter if you are from Mexico yourself or just interested in the topic!
Besides Brazil, Mexico has the second largest start-up ecosystem in Latin America. Also, the country has nearly 130 Million habitants, which forms a big sales market. The star-up hotspots in Mexico are Guadalajara, Mexico City, Monterey and Tijuana.
Right now, there is a decline in the number of investment fund contracts. This could be due to the generally uncertain investment climate in Mexico as a result of the dispute over the North American Free Trade Alliance NAFTA and the Mexican presidential elections in 2018. Furthermore there had been a current trend that investors tend to invest in already established start-ups which makes it hard for new ideas to grow. Overall the focus on investments of national and foreign funds in the country is on financial and Internet services, but also in the industrial sector.
Reasons why Mexico is attractive for young entrepreneurs:
- Optimal geographical location due to the proximity to the USA and the two ocean coasts
- Young country with many people of working age (average age of the population is 27.4 years)
- Mexico is a member of the G20 and is linked to 45 countries through 12 free trade agreements
- High potential in e-commerce and tourism
- Possibility to be your own boss offers an attractive alternative to low wages and few working days
- Government significantly improves infrastructure to compete internationally in sectors such as telecommunications and transport
- Mexico currently ranks 36th in the world in terms of the ease with which a company can be founded
Of course we cannot only show the positive side of building up a business in Mexico.
There are also some difficulties you have to face, when you think about becoming an entrepreneur in Mexico:
- There is no possibility for bank loans, as commercial banks in Mexico are very conservative in granting loans
- One of the main challenges for Mexico remains the violence related to organized crime and corruption in both the government and the local police
- The payment of taxes is a laborious process in Mexico. Currently, corporate income tax takes about 155 hours to register and is at about 30%. The same applies to the processing of VAT and social security applications
- Lack of competition is an obstacle to growth in Mexico, as there are many already established monopolies
However, these reasons should not stop you from becoming an entrepreneur. Both the state and private institutions can support you in your career.
Here is a selection of support programs in Mexico:
Since 2013 there is the National Institute for Founders Inadem (Instituto Nacional del Emprendedor):
- Authority has its own funds, such as the Fondo Nacional Emprendedor, which invest directly in companies
- Invests in venture capital funds such as LIV Capital, IGNIA, ALLVP and Dila Capital, which in turn finance promising start-ups
Start-up centres give you the possibility to work in a working space, get legal support and access to investors and potential cooperation partners. The most popular start-up centres in Mexico are:
- Start-up Mexico (main start-up centre): operates campuses in Mexico City, León, Mérida, Nuevo Laredo and Gurétano
- Ciudad Creativa Digital in Guadalajara
In addition, large venture capital funds such as 500 start-ups offer help to founders in the form of incubators and accelerators. Private companies, national development banks, universities and the national science council Consejo Nacional de Ciencia y Tecnología (Conacyt) also offer similar programmes.