Mexico is the most attractive country for the expansion of startups in Latin America

Mexico is the preferred country for Latin American startups to expand internationally, according to the study “Soft Landing in Latin America” ​​carried out by Endeavor, the investment fund General Atlantic, Mastercard and Google.

Of 271 companies identified in the study within the region, 145 expanded to Mexico; while 80 arrived in Colombia; 74 to Brazil; 52 to Peru; 51 to Chile and 49 expanded to Argentina. In all the countries covered by the study, Mexico is the main destination for startups.

On the other hand, Argentina is the country that exports the most companies to other countries in the region, with 63 companies in total; Chile follows, with 59; Mexico and Colombia have exported to 52 companies; while 32 companies have left Brazil and only 19 from Peru.

Most startups expanding to Mexico come from Brazil, Colombia, and Peru. In contrast, a good part of the Mexican startups that have managed to expand internationally have done so in Colombia, the United States and Argentina.

Venture Capital

The main reasons why Mexico seems to be among the most attractive countries in the region for a startup to begin its international expansion process are access to capital and the possibility of more easily accessing the US market.

According to Endeavor, with information from Pitchbook and Crunchbase, during 2021 there were 86 venture capital investments in companies established in Mexico, for a total of 3,770 million dollars, which means that venture capital investments grew three times between 2020 and 2021.

But Mexico is still quite far behind other countries in the region if venture capital investment is considered as a percentage of GDP. While in the United States, this figure reaches 1.38%; in Colombia it is 0.55%; in Brazil, 0.52%; in Mexico it is just 0.29 percent.

Fintech, logistics and e-commerce

Among the companies that have begun their expansion process within the Latin American region, the majority belong to the financial technology (fintech), logistics, and electronic commerce (ecommerce) sectors, although other industries are not left out , such as food-oriented technology (food tech); recruitment technologies and those dedicated to the sale and management of real estate properties (prop-tech).

Among the main challenges and problems when starting an expansion process in the region, the companies stated that hiring local talent is the main obstacle to overcome; followed by team culture and adapting the business model to the local market.

Mexico also seems to have an advantage in this regard, according to the study, since 41% of the companies considered by the study prefer the country to hire personnel, compared to only 10% who like to hire personnel in the United States and Brazil.

rodrigo.riquelme@eleconomista.mx