Entrepreneurship in Mexico

Entrepreneurship is gaining support in various developing nations around the world; I want to address more specifically entrepreneurship in Mexico. Entrepreneurship has expanded tremendously in Mexico, now there are more than 500 incubator programs in 190 cities in Mexico. Today capital is flowing into Mexican startup companies from Mexican investors and American venture capital. Mexican venture is not fully developed, according to the Harvard Business Review blog; the Mexican venture industry is about 40 to 50 years behind in development than that of American venture.

In terms of venture capital, Mexico lags mainly due to poor infrastructure, the Mexican government is not at a point where laws overrule and legal documentation has the type of value of that in the US. In order for venture capital to flourish sooner here, investors need to have the Mexican approach to business; that is building long lasting relationships and networking. I say this because from a cultural perspective US is more of a rule-based society while Mexico is more of a relationship-based society, taking advantage of these differences will allow investors to succeed in Mexico. In a sense this follows the idea of greater risk yields greater reward, the current Mexican environment is not ideal, however, this keeps competition out and the current market is ideal for startups. According to a national demographic profile in 2010, a staggering 54% of the unemployed population is under 30 years of age and unemployment is greater among the people with a university degree. There is a huge labor force specialized across the spectrum looking for work resulting an in lower labor costs, with this entrepreneurial startups will have the resources to grow and ultimately drive the economy. The startups do not necessarily have to be technology startups, but can be others that will better suit the current development stage of Mexico, for example, engineering firms, security firms, banking, logistics, and tourism.

Currently there is an increasing trend in middle class population, further supporting entrepreneurship, the gap between the super wealthy like Carlos Slim and the extremely poor and uneducated will surely be diminished as the economy starts to move forward and expand. Finally I want to touch on a final topic, Tequila, this is unique to Mexico and can drive capital in from around the world. Most recently Milagro Tequila, this was started by two college students in Mexico from Mexico City, founded in 1997 this product now ships internationally and has William Grant and Sons, Inc. a premium distillery as a majority stakeholder. This hints at Mexico having the potential big money makers so long as investors are willing to venture into this developing environment. Furthermore, if entrepreneurship can harness Mexico’s tourism industry and create companies that use this strength to create jobs and attract foreign capital then we are looking at a very promising future.

By Pedro Cuacuas, who will graduate from Carnegie Mellon University in May, 2013, with a B.S. in Business Administration. Pedro is a son of Mexican parents, one of four children, born in LA and raised in NYC.

“I witnessed my parents build their business from the ground up over the last 10 years. Growing up in this kind of family facilitates my goal of starting up my own business in the near future. I am considering several options, many being in Mexico. With a new political party in power in Mexico, I hope for a more favorable economic environment for start ups.”