Analysis LatAm: Where can Mexican startups turn for financing?

In recent years, startup companies have changed the digital and economic landscape.  Google Facebook and Twitter launched the startup trend in the U.S.  Today, startups represent an important part of the country’s economy (and in many cases, the world).

What are startup companies?  They are small, recently created companies with limited capital.  They generally revolve around some sort of digital innovation (mostly related to Internet), offering the possibility of rapid growth in a very short time.  The abundant presence of startups can give a jump start to a country’s economy, both in terms of job creation anddissemination of knowledge in specific sectors.

Latin America’s moment...

At a time when Europe and the U.S. find themselves in a difficult economic and financial situation, many large companies are now turning their attention to Latin America’s growth. Telefónica recently announced a major restructuring that highlights its commitment to Latin America.  In fact, Belen Amatriain, Director of Global Marketing for Telefónica, talked about the giant Spanish telecom’s main marketing strategies during the recent Latin American Advertising and Media Summit organized by Portada. Telefónica and other large companies have set aside investment funds to support the creation of small businesses in strategic sectors.  Moreover, although investing in small Latin American companies specializing in technology, marketing and media can be risky, the returns can be very high.  (See our recent article: Bonanza of investments in Latin American marketing and media companies)

...and Mexico’s

Creating these companies is never easy, which is why there are several organizations that support digital entrepreneurs with money as well as know-how. Portada analyzed the situation in Mexico and found two sources for entrepreneurs who need support to launch their own digital innovation business: Mexican VC and Pase Usted Genera.

Mexican VC: Mexico’s Silicon Valley

A team of entrepreneurs, hackers and investors from Silicon Valley VC launched the Mexican VC program, which seeks new talents to support in the Mexican digital entrepreneur sphere, offering funds, expertise, legal advice and access to the global startups community.

To qualify, entrepreneurs need to apply to one of the program’s competitions (four are offered per year). The selected projects receive an initial investment of $20,000 and professional support for 6 months, in exchange for 15% ownership in the company, after which time the entrepreneur can borrow more money if the company’s prospects are deemed promising.

The financing allows new entrepreneurs to leave their day jobs to devote themselves full-time to developing their idea without leaving home. In addition, Mexican VC does not dictate company policy nor does it occupy a seat on company boards (which is often unnecessary).

The names behind Mexican VC are David Weekly, of San Mateo, California; Santiago Zavala, of Mountain View, California; Cesar Salazar, of Mexico City; and Lisa Seeman, of San Francisco, California.

Genera.mx: technology that improves life in the city

Genera.mx is an initiative of the Pase Usted partnership, whose objective is to improve quality of life in cities through the development of technological projects.

Through its annual competition, Genera.mx awards scholarship grants of 100,000 Mexican pesos to 10 innovative projects, in addition to offering a consultancy and talks program, and a final meeting with investors, media and government officials to solicit the funds required to develop projects to their completion.

This forum has already been conducted twice, first in Mexico City in 2010 and in Monterrey in 2011. Projects submitted were in the areas of tourism, information, finance and renewable energy.

The 10 finalists of the second edition have still to be selected. The finalists of the first edition were Cursa.me, Ingenial, Tepito Recicla, 42 Claps, Inkuna, Isla Urbana, Geonecta, Rutanet, Bunch of Locals, and ILUMEX. The next edition of the forum will be held in 2012.


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