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News Article

Mexico's Entrepreneurship: A funding issue

By Jorge Ramos Zwanziger | Fri, 11/27/2020 - 17:42

 

Reliance on personal funds suggests entrepreneurship in Mexico might be hurting from a lack of resources. About 90 percent of Mexican startups are financed by entrepreneurs themselves for the first three years of the venture, reports the Mexican Entrepreneurs Association (ASEM). After that time, 85 percent of startups continue being financed by the entrepreneur.

ASEM’s X-Ray report describes the status of entrepreneurship in Mexico using information from 1,102 companies from all sectors in Mexico. When it came to the perception of the country’s government and how it helped, 48 percent of entrepreneurs said that in Mexico conditions were not ideal to build a company, with 57 percent of them saying this was because of lack of alternatives when it came to funding.

Capital is one of the main problems in the startup and small-business ecosystem in Mexico but there are always other approaches to find opportunities. “Mexico needs to improve its global image by keeping immense talent in the country and continue to attract more foreign direct investment by tightening its grip on national security and rule of law,” said Nick Grassi, COO and Co-Founder of Finerio Connect, to MBN.

Fernando Lelo de Larrea, Partner at ALLVP, told MBN this might be a good time for entrepreneurs. “The COVID crisis is allowing talented people to finally launch their projects. However, there are few funds available in the short term. Due to investment cycles, some funds are now in fundraising or are finishing their previous cycles so there is little supply of entrepreneurial capital and much demand.” Nevertheless, he highlighted that Mexico has become an attractive place for international funds. “International funds have a lot of cash and appetite to invest in Mexico and Latin America, more than we have ever seen before.” This year, the Global Entrepreneurship Monitor (GEM) placed Mexico as the second-best country to be an entrepreneur in Latin America, only behind Argentina. This makes innovation in the entrepreneurship sector really important for the country.

Grassi urged Mexico to “explore its unique position in the world, as both a major domestic market, with almost 130 million consumers, and a geographically rich, talented, yet affordable neighbor of the largest economic power in the world.” According to Grassi, “this is Mexico’s time to shine,” pointing to Joe Biden’s recent win in the presidential race.

To read Fernando Lelo de Larrea H’s interview: Click here.

To read Nick Grassi’s article on MBN: Click here.

The data used in this article was sourced from:  
MBN, ASEM, GEM
Photo by:   KOBU Agency, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst