New Investments, Initiatives get in the Way of Development

Tribal Credit, a fintech company specialized in the creation and facilitation of payment methods for startups, just raised US$34.3 million in a combined Series A and debt round led by QED Investors and Partners for Growth (PFG), as well as other important investors such as BECO Capital, Global Ventures and Endeavor Catalyst. This company aims to present a solution for startups because the current banking infrastructure does not correctly support them. Tribal claims to bridge the gap between what the banking infrastructure can offer and what startups truly want.

The company aims to grant financial inclusion to new companies in emerging markets. To do so, the company developed and patented an approval process that uses AI to analyze startups in emerging markets. This algorithm analyzes the startups' founders' history, financing, investors and business opportunities to evaluate if the company is a good candidate for credit lines or services. 

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• Juan José Cervantes, Managing Partner of Trebol Capital and an MBN Startup Contributor, shared information on Special Purpose Acquisition Company (SPAC) investment opportunities. Cervantes mentions that SPACs, also known as "blank check" companies, have been around for decades. In the past, they had a bad reputation for scamming investors but the Securities and Exchange Commission (SEC) started regulating SPACs in an attempt to reduce fraud. The regulation granted investors the right to redeem units before an acquisition. As a last remark, he mentions, "Remember that a SPAC is a shell or blank-check company at the time of the IPO since it does not have any type of business operation or assets. SPACs rely on the experience and track record of the management team, who should have enough knowledge and networking to find an attractive acquisition target and to complete the acquisition through a business combination that could be a merger or shares purchase".

• Mexico's domestic sales of electric and plug-in hybrids have grown by 47.2 percent and 35.7 percent, respectively, showing the Mexican population’s interest in investing for the future as global temperatures continue to rise due to climate change. Volvo, a global leader in automotive safety, noted the growing preference for electric vehicles (EVs) and hopes that during 2021 these will represent 20 percent of its sales in Mexico. What has stopped sales is that hybrid vehicles and EVs are still an expensive investment but incentivizing their adoption is a priority for the Mexican automotive industry, as is fostering the required infrastructure to charge them and the technologies that support them.

• Some public policies and the repercussions of the pandemic on the Mexican economy are raising concerns among analysts about how and when the country will recover. Several economic areas may not recover until 2026. Income per person will take longer to rebuild because Mexico had a greater contraction during 2020 than other developed nations. Another factor to take into account is the projected increase in inequality in the country. "The country will have a lower potential growth rate, first due to the damages of the pandemic and second due to the behavior of investors. There is nothing to suggest that (the country) will increase in productivity. Lower investment means lower levels of capital and if investors perceive that the rules of the game change, the investment will fall," mentions Carlos Serrano, Chief Economist at BBVA Mexico.

• The Mexican Institute for Competitivity (IMCO) stated that the Hydrocarbon Law, which was recently approved by the Chamber of Deputies, will have detrimental effects on the Mexican economy. "The Reform entails negative repercussions for families and the entire Mexican productive sector, whose access to basic inputs such as gasoline, diesel and natural gas, among others, would be interrupted when moving production, processing, transportation, storage, sale, import or export of these inputs from the private sector to companies like PEMEX. Moreover, PEMEX's financial statements show their serious operational and administrative inefficiencies," IMCO explained. José Medina Mora Icaza, President of the Employers Confederation of the Mexican Republic (COPARMEX), also mentioned that the Reform is unconstitutional as it affects one key aspect of a healthy economy: free competition.