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Mexico City

With its proximity to the United States, large market, and considerable startup infrastructure, El Distrito Federal shines with entrepreneurial potential. The city is home to one of Startup Weekend’s first international offices, in part due to the breakneck entrepreneurial growth observed across Mexico. Further, the arrival of accelerators like 500 Startups ensures that businesses that appeal to the country’s 120 million people can grow quickly. Government support for entrepreneurship has been considerable, with a National Institute for Entrepreneurship and Mexican-U.S. Entrepreneurship and Innovation Council, both established in 2013. However, the startup ecosystem is still young. Mexico’s complex and often glacial legal system continues to pose problems for fostering business, and cartel instability poses a general risk.

In This Market

These businesses offer industry expertise and are a source of startup talent and potential customers. They help fuel the local startup community.

Opportunities

  • Considerable existing startup infrastructure, with incubators, co-working spaces, VC funds, and a variety of events that support entrepreneurs.
  • Mexico City’s diverse and large population brings with it a wide variety of creative and engineering talent. The country’s overall size, at 122 million people, provides a sizable domestic market for startups.
  • Strong government support under President Nieto for entrepreneurship, including a partnership with the United States, bodes well for current and future entrepreneurs.
  • A high concentration of national and multinational companies. With these companies comes not only talent, but also a wide variety of potential customers and partners for startups.
  • Approximately half of Mexico’s population is under 30 years old. This preponderance of youth is not just a general economic boon, but specifically encouraging for entrepreneurship and a tech-savvy generation.
  • Proximity to the United States and favorable economic ties due to NAFTA make Mexico City accessible to American entrepreneurs and investors seeking new markets.

Risk Factors

  • Political instability and cartel violence. The resultant insecurity is a pervasive risk for those in Mexico.
  • The startup ecosystem is still pretty young, and like many cities, struggles with downstream access to capital. As a result, many startups look to the United States to fund at least part of their rounds.
  • Government inefficiency. Though efforts have been made to reform Mexico’s ponderously slow legal system, it remains a major impediment for businesses.
  • Proximity to the USA makes things difficult. It is challenging to compete with American startups next door that are focused on scaling globally with the capital and talent to do so.
  • A complex geography. Mexico City is huge and complicated, and also suffers from fairly high air pollution (though this is improving). These can pose as environmental / lifestyle disincentives to entrepreneurs.
  • Currently, there is a currency risk as the Peso is losing value. This makes foreign, specifically American, investors less likely to invest in Mexican startups.
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