That was supposedly Jesse James’ response when asked why he robbed banks. Might be apocryphal, but no less insightful for it: look for opportunities where you have the best chance of success.
My friends and co-bloggers, Avikk Ghose, Leonardo Shapiro, and I feel very strongly that where the money will be in the coming years is in Latin America and, more specifically, Mexico. The Mexican government, elected in 2012, has pushed through an unprecedented set of core reforms that have made the country more stable, more competitive and more investor-attractive. They started, for example, a program where early stage venture funds can get US$5M as matching funds from the federal government. They also reformed laws going back to decades that forbade private investment in the oil/fuel supply chain. Creating significant opportunities for entrepreneurs in the giant oil industry in Mexico and helping de-risk them for investors by taking some of the funding, are two concepts unthinkable in the Mexico of just 2 years ago.
Add to the government support that fact that Mexico has always had strong technical education, led by the Tecnologico de Monterrey, plus a host of new incubators taking advantage of the opportunity and you have the foundational success keys in the start-up cycle:
Safe and fair market -> skilled entrepreneurs -> money -> mentors.
We are now seeing the results of these efforts in real time. Endeavor, the most successful worldwide network of high impact entrepreneurs, has seen their Mexico base grow exponentially and their local entrepreneurs become some of the top job and wealth creators in the network. Some of their exciting tech companies include Carrot (a Zipcar version for the local market), Kubo Financiero (P2P SME lending), Instafit, fighting pervasive obesity in the country with better habits through technology, and our own Mimoni, the largest online consumer lender in Latin America. All of these could have easily been Silicon Valley companies, though with much higher start-up costs and in a significantly more competitive market. And of course starting in Latin America does not preclude these companies from refining the product, model and management to then continuing north to expand.
The world is taking heed of Mexico’s time. Jim O’Neill, of BRIC fame, has now declared himself for the MINTs. Clearly, there’s something happening here, though it is exactly clear: 2,000 miles of shared border with the largest economy in the world, decades of top-notch technical education that requires fluent English to graduate, a government willing and able to push through core reforms, and continued cost increases in Asia all add up to Mexico being in a place to, as O’Neill says, “steal the thunder of China.”
Naranya Labs, in Monterrey, is a great example of what the short-term future of venture and technology will look like in Mexico: they created an incubator/funding program in early 2013 and since then have partnered with NXTP.Labs, received government matching funds and have seen a significant increase both in quality and quantity of its applicants (last year’s crop included, for example, Kuona, an in-store product search app). There is no doubt we will see very exciting innovations from Mexican tech start-ups in the coming years.
Yes, that’s where the money will be.