Mexico’s AI Gap: Why We're Behind and How to Close the Distance

A few days ago, I had a revealing conversation with Carlos, a Ph.D. technology expert who's exploring the landscape of artificial intelligence companies in Mexico. He asked if I knew of any Mexican startups developing AI or implementing solutions based on this technology. Curiously, that same day, a friend recently hired by OpenAI had posed exactly the same question.

Living in Silicon Valley, where AI dominates virtually every conversation, I found it striking to realize that in Mexico, a country that should be leveraging this technological revolution, AI projects are surprisingly scarce. This observation led me to investigate further: Why is Mexico falling behind in the artificial intelligence race?

The Massive Venture Capital Gap

The numbers don't lie, and the difference in venture capital investment between Mexico and the United States is staggering.

The United States invested approximately US$178 billion in startups during 2024, with 4% growth compared to the previous year, driven primarily by mega-rounds in artificial intelligence. Mexico achieved US$1.67 billion in the same period. Although this represents an impressive 59% growth compared to 2023, it's still barely 1% of the US volume.

This disproportion becomes even more critical when we analyze specific investment in AI.

In the United States, 42% of venture capital in 2024 went to artificial intelligence startups.
In Mexico, the dominant sector remains fintech, capturing approximately 60% of total investment, while companies focused exclusively on AI barely register on the radar.

The Problem of Small Funds

Another determining factor is the size and availability of investment funds.

The US ecosystem operates with 3,417 active VC firms managing US$1.21 trillion in assets and with US$312 billion ready to invest. A typical fund in the United States manages around US$35 million, while the largest exceed US$4 billion.

In contrast, the average Mexican venture capital fund manages just US$10.5 million, with investment tickets that rarely exceed US$300,000 in early stages. This capital limitation directly affects startups that need substantial investments to develop complex technologies like AI.

Focus on Practical Solutions vs. Deep Innovation

Investment patterns reveal fundamental differences in the priorities of each ecosystem.

In the United States, investors bet heavily on frontier technologies. Companies like OpenAI and Anthropic have captured billions to develop AI models that transform entire industries. The vision is to create disruptive technology that defines the future.

In Mexico, VCs favor proven business models that solve immediate local problems. The emphasis is on practical solutions for banking, e-commerce, or logistics, using existing technology adapted to the Latin American context. Although these ventures frequently incorporate AI as a tool, few develop it as their main product.

As a Mexican investor told me: "Here, we look for growth and profitability, not so much the technology they use to achieve it."

Success Stories: Quality vs. Quantity

Startup ecosystems feed on their success stories, and here too there is a notable gap.

The United States is home to 656 active unicorns with a combined value exceeding US$2.11 trillion. This impressive track record generates a virtuous cycle: role models, liquidity for reinvestment, and experienced talent.

Mexico has created eight unicorns, mainly in fintech, retail, and logistics. Companies like Kavak, Clip, and Bitso demonstrate that it's possible to build valuable startups from Mexico, but they remain exceptions rather than the rule. Moreover, none of these most successful Mexican companies is centered on creating proprietary AI technology.

The Regulatory Framework Obstacle

Government policies play a crucial role in developing the entrepreneurial ecosystem.

The United States fosters innovation through flexible corporate structures, tax incentives for investors (such as the QSBS exemption), strong research support, and a financial ecosystem that facilitates both capital entry and exits via acquisitions or IPOs.

Mexico has advanced with initiatives like the Fintech Law, which effectively catalyzed investment in that specific sector, but lacks a comprehensive policy for technological innovation. The elimination of INADEM in 2019 reduced direct government support for startups, and there remains an absence of significant tax incentives for investors in high-risk companies.

The Barriers Holding Back AI Ecosystem

Analyzing these factors together, we can identify six main obstacles preventing the flourishing of AI startups in Mexico:

Scarcity of specialized local capital, particularly for growth stages.
Limited base of advanced AI talent, with constant brain drain of the best specialists to Silicon Valley.
National market with lower purchasing power, complicating the monetization of sophisticated AI solutions.
Few established exit routes for tech startups (acquisitions or IPOs).
Disconnection from global VC networks specialized in AI.
Challenging institutional environment that increases the perception of risk for foreign investors.

Closing the Gap

Despite these challenges, I am convinced that Mexico has a historic opportunity to position itself as a regional leader in AI. To achieve this, we need to act on several fronts.

Strategically Mobilize Capital

Introduce specific tax incentives for investments in AI startups.
Channel a small percentage of pension funds (Afores) toward technological venture capital.
Create government co-investment programs focused on AI, similar to the successful Israeli Yozma model.

Develop Specialized Talent

Strengthen academic programs in data science, machine learning, and AI.
Create scholarships and incentives to retain specialized Mexican talent.
Establish collaborations with leading global institutions in AI.

Foster AI Applications Specific to the Mexican Market

Identify sectors where Mexico can develop competitive advantages in AI (agritech, smart manufacturing, advanced fintech).
Promote collaboration between established corporations and AI startups.

Create a Progressive Regulatory Framework

Develop a national AI strategy with regulatory clarity.
Simplify processes for the creation and operation of technology startups.
Facilitate connection with international markets.