Entrepreneurs and VCs Shared Perspectives on MBF 2024

Mexico Entrepreneurs Summit celebrated its first edition on April 24-25, 2024, at Expo Santa Fe in Mexico City. The event brought together business and political leaders from the venture capital (VC) and entrepreneurship sectors. They engaged in discussions on seizing opportunities and navigating challenges for continued growth in a changing VC landscape following the capital-abundant period of 2021.

Within the framework of the Mexico Business Forum 2024, Mexico Entrepreneurs Summit provided a comprehensive platform for business and political leaders to discuss the current state of the business landscape for Mexican entrepreneurs. Discussions started with financial accessibility, one of the most common challenges Mexican entrepreneurs face when developing a project. 

During her intervention, Mónica Ajarrista, CIO, Addem Capital, highlighted that more than 54% of companies avoid seeking any form of financing, and over 77% of Mexican SMEs lack access to essential financial resources, a situation that despite being challenging, opens opportunities for SME financing both as a business model and as a way to boost the entrepreneurship ecosystem. “Fintech companies and credit originators are stepping in to address the problem, being essential in closing the gap thanks to their innovation and products,” she added. 

In this environment, experts highlight fintech startups as one of the most dynamic subsectors, particularly for their role in addressing gaps in banking access among the Mexican population. "Today, fintechs are very relevant. Getting here has been an enormous infrastructure-building effort that took years," explained Héctor Cárdenas, CEO and Co-Founder, Conekta. 

As fintechs make payments and access to financial services easier, experts underpinned the role of process digitization to enhance startups' and SMEs’ activities more effectively, as employees spend over 5% of their work time in non-core activities such as navigating administrative and travel expenses tasks, revealed Luis López Albajara, Country Manager, Okticket Mexico. 

For SMEs and startups involved in retail, challenges are centered around meeting the rising demand for omnichannel solutions in marketplaces, as consumers are increasingly inclined to begin their purchase journey in one channel and complete it in another. During her intervention, Carolina Arreola, Global Technology Alliances Manager, Zendesk, suggested that retail strategies should allow for the integration of all sales channels into one place, including physical stores, websites, apps, social media, and marketplaces. 

During his presentation, Domingo Cruzat, CEO Spanish Latam - Founding Team, Merama, stressed how e-commerce in Mexico and Latin America still has low penetration when compared to other regions, showcasing potential growth opportunities and favorable market dynamics. In this sense, Cruzat stressed the importance of investing strategically in companies, always respecting their operational independence, and helping them in areas like compliance, accounting, and legal affairs, among others. Similarly, Adolfo Babatz, CEO, Clip, emphasized the importance of resilience and learning from a company’s mistakes. He highlighted the need to focus on goals and mission. "What we wanted to do is extremely simple: ensure that any business or person could accept any payment method in one place," Babatz stated. 

Being an entrepreneur in Mexico requires consideration of not only immediate variables affecting the business but also unforeseeable factors. Experts suggest continuous improvement in company processes and adopting an open-to-change approach to better adopt new strategies derived from constant internal evaluations. "What we need are a series of hypotheses that allow us to establish a framework,” said Víctor Moctezuma, CEO, iLab during his presentation, Where Bad Ideas Find Love. 

Technology adoption, including technologies like Artificial Intelligence (AI), is a key change and challenge that startups and SMEs must navigate. While startups can more easily adopt new technologies, experts stress the importance of careful consideration. According to experts, companies must determine whether integrating these technologies will truly provide a competitive advantage, as adopting technology solely to follow a trend could jeopardize business continuity, and even compromise cybersecurity. “We tend to adopt new technologies, which can sometimes lead to a larger attack surface, especially when lacking a well-defined strategy,” said Rafael Verduzco Vázquez, Co-Founder and CTO, Zenda.la. 

Experts highlighted that addressing cybersecurity issues is essential for startups and SMEs, as they often struggle to survive a cyberattack due to their size. Nonetheless, their size also plays in their favor, as they can leapfrog several generations of infrastructure to tackle cyber threats, as noted by Andrew James Devlyn, Co-Founder and Director of Operations, Fairplay.

Mexico Business Forum 2024 was the focal point of various discussions centered around AI. Some experts emphasized AI's role in enabling businesses to scale without extensive resources or a robust physical infrastructure. While presenting challenges such as managing increasing data volumes, AI is poised to make a significant impact on Mexican startups. According to Christine Kenna, Partner, IGNIA Partners, companies that implement AI are more likely to attract investors' attention.

Acknowledging the increasing importance and adoption of AI tools, experts have also urged for increasing women participation in shaping this technology. According to Anaid Sustatia, Google Cloud Lead and member of Women in Tech, excluding women from developing and also training AI tools will lead to replicating social biases within the digital environment. “It is important for policymakers, companies, and academia to develop programs that promote women's inclusion in the industry, allowing them to contribute to the execution of these projects”, said Sustatia. 

Experts noted how companies implementing AI are more attractive to investors, as it can bring more efficient processes, requiring less personnel to deliver tasks. However, experts have stressed that VCs’ investment thesis have not drastically changed, therefore, startups seeking capital should not base their pitches on solely AI, but on the synergies they create and how their business model generates value for shareholders. “AI is just a tool, not a product to sell. Back to basics, if you have an innovative solution and business model, it means you have competitive advantages on the talent side,” said Rafa de Haro, Co-Founder and Managing Partner, Cometa. 

Experts say many funds look for ambitious entrepreneurs with clear business perspectives and sustainable growth plans. They emphasize the importance of having an appropriate capital structure to catch investors' attention. “An important common denominator is looking for purpose. Ensuring sustainability aligns with the different forces in the system,” said Ytzia Belausteguigoitia, CEO and Co Founder, Troquer. 

To conclude the two-day entrepreneurship program, experts discussed recent changes in the VC market. Mexico has transitioned from a capital-abundant period in 2021 to a more cautious approach from VCs. Under the now-called “new normal of VC,” capital will flow to companies that are ready to receive the resources, this means, those that show robustness, strong projections, and strong value embracement. “The adjustment was necessary. Irrational valuations did not benefit anyone, neither startups nor VCs. We are now noticing that entrepreneurs are also less concerned about valuation, contrary to what happened previously, when they were experts in justifying extremely high valuations,” said Constantino Matouk, Vice President, Global Bimbo Ventures, Grupo Bimbo.