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The next great startup will be a ‘unicornio’.

‘The minute a major Silicon Valley VC sets up a branch in Mexico, you will be out of business,’ a Mexican founder told me over dinner at last year’s Mexico VC Day in San Francisco. I did not respond because I actually think our risk of going out of business is higher if they don’t come. And we don’t expect them to come in the near future.

Last June, SVB (Silicon Valley Bank), LAVCA (Latin American Venture Capital Association) and Endeavor organized a trip to Mexico City for ‘leading Silicon Valley VC funds and investors’ in order to scope out the investment potential in Mexico. The entrepreneurial community expected to welcome partners from top-notch funds such as Sequoia, Adreessen Horrowitz and Accel, who were coming to get their piece of Mexico’s dynamic and fast-growth investment pie. Unfortunately, not one of these VC market leaders sent a partner, EIR or associate, reflecting their indifference for Mexico´s vibrant VC investment climate. A similar trip to China was organized by SVB 7 years ago with great reviews to the point that some claim it sparked off a wave of successful investment.

So why the lack of interest? Is Mexico too risky? Unimpressive Growth? Lack of innovation? Seems too small today? Silicon Valley funds invest in much more unstable and risky environments such as China and Israel. They participate in zero-growth regions like Europe and Japan. China and India’s hottest venture backed startups are mostly copycats. And finally, when has today’s market size been a problem for an industry living in tomorrow!

I am sure many have great answers to justify all of the above. While, I can’t explain the indifference to the Mexican investment market, I certainly can describe what they are missing out.


‘We invest in Silicon Valley because, we happen to find a disproportionate amount of talent here. We’ll go where the talent is’, so they say.

Mexican founders are excellent. Just as in Israel and India, Mexican entrepreneurs develop a grit early-on as they defy the immeasurable odds of functioning in a business environment riddled with corruption, insecurity and monopolistic uncertainty. Time and time again Mexico has been ranked within the top-ten hardest working countries in the world, testimony to the relentless work ethic that governs the nation. Mexican entrepreneurs never shy away from long hours, long days, long years. Most of the entrepreneurs have lived in the highly international and integrated NAFTA economy. Founders in Mexico have studied in Stanford, MIT or Harvard and worked for Paypal, Groupon or Uber before launching their first company. This founders are supported by high profile Endeavor mentors, experienced Angel Venture Mexico angel investors and a new group of extremely talented Venture Capital investors.

When BlablaCar, the French Unicorn, decided to launch in Latin America, Brazil seemed like the most obvious option and started working on its development. However, they made a 5,000 mile course adjustment and instead acquired Mexican startup Aventones to partner with the talented Cristina Palacios, Alberto Padilla and Ignacio Cordero. More recently Mexican entrepreneurs Oscar Salazar, first Uber CTO, and Adolfo Babatz, ex Paypal executive and MIT grad, respectively raised $14 M for healthtech startup Pager and $5 M for fintech juggernaut Payclip to scale two of the most promising new companies in the region. Mexican founders are finding ways to succeed but a huge talent pool is still untapped.


“Mexico has so much potential to become a powerful country (in the startup world). It can change to an innovation-based economy. It could be huge.” Marcus Dantus, founder of Startup Mexico

Mexico’s entrepreneurial ecosystem has finally begun to gain density and dynamism, leading Latin America’s early stage investing activity — complete with co-working spaces, accelerators and angel investors. The Mexican government may have trouble keeping a felon in prison but they nailed it when creating INADEM (Instituto Nacional del Emprendedor) one of the most advanced and comprehensive public policy frameworks, attracting the likes of 500 and Techstars. Three years after a massive injection of subsidies to the ecosystem, Mexico has become the hottest market for the most promising startups from the Spanish speaking countries around the world.

Industry trends

‘The product is great, your traction is impressive and we’d love to partner with you but it is still too small for us’. <blank Silicon Valley investor> to <blank promising Mexican startup>.

As an investor helping founders raise follow on rounds in Silicon Valley, we hear the above comment all the time regarding E-commerce and Fintech. And looking at today’s figures, these industries are indeed small. The huge internal market potential is undeniable unless, somehow, the millions and millions of Mexican smartphones will never buy or bank. If the timing doesn’t seem right for these market, timing is phenomenal for larger industries that are going through systemic change. These untapped opportunities represent 100 billion dollar markets within the Healthcare, Telecom and Energy Sectors, further enhanced by technology shifts and long-awaited regulatory reforms. The next ‘Unicornio’ may not be an app but it might as well be a SAS startup for hospitals or an electricity trading platform.

If you are a value-added investor, you know that in order to evaluate any investment opportunity, you need to include your own impact on the start up’s path to success. When evaluating Mexico as an opportunity, I would argue that Silicon Valley funds need to compute the impact of their investing in Mexico. When Dave McClure partnered with Cesar Salazar and Santiago Zavala to launch 500 Mexico City, they probably made that calculation.

They could leverage the raw talent and seize these amazing opportunities. Unfortunately, as good as they are, they need to team up with their Silicon Valley follow on co investors to make their model work. Our ecosystem would benefit greatly from having Silicon Valley funds investing in Mexico; working along these funds would make us better Venture Capital investors for our founders. In the end, founders would be able to have the best of two worlds: the Silicon Valley know-how and capital and the local support and experience.

So today, unless leading Silicon Valley investors start thinking about the Mexico of tomorrow and invest here, we are all missing out.

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I write about my work as an investor, a lecturer, and a mentor. In general, musings about Latin American tech, VC and life.

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